Annual Report Annual 2019 Accounts and Delivering innovative supply solutions chain

Eddie Stobart Logistics plc Annual Report and Accounts 2018 Eddie Stobart Logistics plc

Contents

Strategic Report Letter from the Chairman 1 Structure illustration 2 DBAY 2 Strategy 2 Business and Financial Review 3 Risk management and principal risks 8

Governance Board of Directors 10 Chairman’s Governance Statement 11 The Board 12 Audit Committee report 14 Remuneration Committee report 16 Directors’ report 18 Statement of directors’ responsibilities 20

Financial Statements Independent Auditors’ report 21 Consolidated Income Statement 28 Consolidated Statement of Comprehensive Income 29 Consolidated Statement of Changes in Equity 30 Consolidated Statement of Financial Position 31 Consolidated Cash Flow Statement 32 Notes to the Consolidated Financial Statements 33 Company Statement of Financial Position 72 Company Statement of Changes in Equity 73 Notes to the Company Financial Statements 74 Glossary 80 Advisors 81 Annual Report and Accounts 2019

Strategic report

Letter from the Chairman reportStrategic

Dear Shareholders Our investment in the Eddie Stobart COVID-19

group To date the COVID-19 impact upon the Governance As your new Chairman, I am conscious that Following the DBAY transaction, a new board Company has been limited as the Company I join the business at a critical juncture for and leadership team, led by Executive is essentially a cash shell, but it has delayed the Company as we continue to explore Chairman William Stobart, its former COO the planned transition into an AIM investment opportunities to become an AIM investment and CEO, was put in at GWSA, the holding company as explained further in this report. company. I am also conscious of the turbulent company of the Eddie Stobart business. The We will continue to monitor the impact of the period the business has emerged from and Company is supportive of the measures being pandemic upon our investment and also the the on-going uncertainty as we go through the implemented by the new team to reorganise wider economy. COVID-19 pandemic. and streamline the operations of the business. As a 49 per cent shareholder, we expect that In the longer term we believe that the Review of the year the Company will benefit from the changes pandemic may give rise to changes in how The financial results for the year show an being made and we look forward to businesses structure their supply chains and in underlying EBIT loss of £9.9m (2018 restated: continuing as a significant shareholder of particular will impact stock holding decisions. Financial statements £9.0m profit) reflecting the issues faced by the the Eddie Stobart business. This may have a positive impact upon the Company in 2019. These results are discussed Eddie Stobart business and parts of the wider in detail in the Business and Financial Review. The Company’s links with the Eddie Stobart logistics sector. I’m mindful that shareholders have suffered business have been further strengthened by a significant fall in share price and have seen the appointment of Stephen Harley, a member Final thoughts their ownership of the Eddie Stobart business of our Board, to the board of GWSA. These For obvious reasons much of this report deals reduced to a 49 per cent minority stake. links, and the contractual arrangements put in with the past and makes for difficult reading. place at the time of the transaction enable the Since I have joined the Board I have been DBAY transaction Board to monitor the Company’s interest in the impressed with the calibre and dedication of I am confident that the DBAY transaction, Eddie Stobart business and contribute to its the leadership team of the Eddie Stobart overwhelmingly approved by shareholders on future development. Further information about business, in which we have our investment, 9 December 2019, was the best option the governance structure relating to the and look forward to the future with optimism. available to the Group to address the liquidity Company’s interest in the Eddie Stobart issues we encountered last year. At the end business is included on page 11 of this annual Finally, I would like to thank shareholders of 2019, the Company had an acute need for report. for their continued support as the Company additional funding to ensure the Group could works towards becoming an AIM investment continue to meet its obligations to customers Transition to being an investment company. and suppliers, and to safeguard the long-term company future of the business and its employees. This The Board believes the best way forward transaction injected £70m1 of liquidity into the for Eddie Stobart Logistics plc is to become Adrian Collins operating businesses of Eddie Stobart (which an AIM investment company focussing on Chairman we refer to as the Eddie Stobart business, investment in the logistics sector. In our view please see glossary) and also allowed this sector will benefit from changing market shareholders to retain an economic interest in dynamics and an increasing demand for the operations. In addition, the Company was logistics services and the companies that can granted an option to acquire an interest meet the developing needs of businesses and in the 18% PIK loan facility provided to the consumers will prosper. I look forward to Eddie Stobart business by DBAY, working with DBAY and the Board to deliver on conditional on shareholders agreeing to the strategy and create value for our convert the Company into an AIM investment shareholders. Further information on DBAY and company and entering into a management our intention to develop an investment strategy agreement with DBAY. for approval by shareholders is included in the strategy section on page 2 of this annual Changes to the Board report. We had intended to complete this Saki Riffner, Chief Investment Officer of DBAY, transition within six months of completion of joined the Board as a Non-executive Director the DBAY transaction. However, this timeline in February, as agreed on completion of the has been extended as a result of the COVID-19 DBAY transaction. This appointment broadens pandemic. Our intention now is to move the experience of the Board and strengthen forward with this transition before the end of the the Company’s links with DBAY. Saki Riffner financial year, subject to shareholder approval. is also a director of Greenwhitestar Acquisitions Limited (GWSA) the operational holding company of the Eddie Stobart business.

1 £50m net of £5m retained in Marcelos Limited relating to transaction costs and £20m revolving credit facility 1 Eddie Stobart Logistics plc Annual Report and Accounts 2019

Illustration of ownership structure of Eddie Stobart

27%*

51%* 49%*

* percentages refer to ownership of issues share capital and control of voting rights This is an illustration of interests indirectly held in the Eddie Stobart business; it does not reflect entities and holding companies have not been included Greenwhitestar Acquisitions (“GWSA”) has a 100 per cent interest in each of the operating businesses except for Speedy Freight, which is accounted for as an investee company; its results are not consolidated DBAY Advisors (“DBAY”) refers to entities managed and controlled by DBAY Advisors Limited

DBAY Strategy *percentages refers to ownership of issued share capital and control of voting rights DBAY Advisors Limited is an Isle of Man-based asset management The Board is working with its advisers to develop an investment strategy for This is an illustration of interests indirectly held in the Eddie Stobart group businesses; it does not reflect corporate entities and holding companies have not been included. firm with offices in London and Douglas, Isle of Man. Founded in 2011, presentation to existing shareholders and potential new investors in order to GWSA has a 100 per cent interest in each of the operating businesses of the Eddie Stobart Group except for Speedy Freight, which is accounted for as an investee company; DBAY is owned by its partnersits results are andnot consolidated. is regulated and licensed by the Isle raise funds and convert the Company into an AIM investment company. In line of Man Financial Services Authority. The firm follows a value investing with this strategy, the Company would seek to invest in opportunities in the approach and invests in listed equities across Europe, as well as in logistics sector alongside its current investment in the Eddie Stobart business. private equity style control investments. Capital is managed on behalf An investment management agreement would be entered into with DBAY, who of institutional investors, trusts, foundations, family offices and pension would manage these investments on behalf of the Company, as envisaged funds. in the circular sent to shareholders in November 2019. In addition, as set out in the circular, existing and new shareholders will be given the opportunity to Over more than 20 years of working together, the core DBAY team has participate in the fund raising, with the intention to use part of the funds raised developed a diversified set of skills from financial and operational by the Company to acquire an interest in the PIK loan facility provided to the backgrounds, with deep insight into a number of industry sectors Eddie Stobart business. In accordance with the provisions of the AIM Rules for including UK logistics, having managed a variety of successful Companies approval of the proposed investment strategy will be sought from investments in the sector. shareholders at a general meeting prior to conversion to an AIM investment company. The conversion must be completed prior to 9 December 2020 in order to avoid the Company’s shares being suspended from trading on AIM.

Details of the proposed investment strategy will be set out in a circular to be sent to shareholders at the time of the conversion to an AIM investment company. 2 Annual Report and Accounts 2019

Business and Financial Review Strategic reportStrategic

Group Performance

Underlying Results 2019 20187 Change Statutory Results 2019 20187 Change Revenue £857.5m £781.5m £76.1m Revenue £857.5m £781.5m £76.1m EBIT1 £(9.9)m £9.0m £(18.9)m Operating profit before exceptionals £(27.8)m £(9.0)m £(18.8)m Governance EBIT1 % -1.1% 1.2% -2.3% Operating profit after exceptionals £(228.0)m £(14.1)m £(213.9)m EBITDA2 £0.0m £16.8m £(16.8)m EBITDA2 % 0.0% 2.1% -2.1% Loss before tax £(238.9)m £(22.3)m £(216.7)m Adjusted (loss)/profit before tax3 £(19.4)m £2.9m £(22.3)m Loss after tax £(231.2)m £(21.5)m £(209.7)m Adjusted (loss)/profit after tax4 £(11.7)m £3.6m £(15.3)m Dividend per share nil 6.3p -6.3p Adjusted free cash flow5 £(21.7)m £(18.7)m £(3.0)m Net cash from operating activities £(8.0)m £(3.9)m £(4.1)m Adjusted earnings per share6 -3.1p 1.0p -4.1p Earnings per share -61.0p -5.9p -55.1p Net debt £214.5m £159.6m £(54.9)m Financial statements

1 Underlying EBIT is defined as profit from operating activities before exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the income statement relating to the management incentive plan and long-term incentive plan, and including the Company’s share of profit from equity accounted investees (and for FY18 also including force majeure and start-up costs associated with contract wins). 2 Underlying EBITDA is defined as Underlying EBIT before depreciation of property, plant and equipment. 3 Adjusted profit/loss before tax is defined as profit/loss before tax adding back exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the income statement relating to the management incentive plan and long term incentive plan (and for FY18 also including force majeure and start-up costs associated with contract wins). 4 Adjusted profit after tax is Adjusted profit before tax less tax 5 Adjusted Free Cash Flow is defined as Cash generated from operating activities less purchase of property, plant and equipment adding back proceeds from sale of property, plant and equipment and less taxes paid and adding back the cash impact of exceptional items. 6 Adjusted Earnings per share is defined as adjusted profit after tax divided by the weighted average basic number of shares in issue at 30 November 2019 7 Restated

Review of the year A key element of the Group’s strategy of becoming an end-to-end logistics solutions provider was to deliver double digit revenue growth. Since 2016, in pursuing that strategy, the Group expanded its warehousing portfolio taking into account customers’ end to end logistics requirements. It was successful in securing several well positioned sites, however, the acceleration of that strategy outpaced immediate requirements. In the short term, costs of surplus properties could not be mitigated, though in the longer term the business should ultimately benefit from these properties through future revenue growth and potential changes in supply chain management giving rise to an increased demand for warehousing.

The development of the warehousing portfolio involved upfront cash receipts which obscured underlying movements in working capital and lessened disciplines around liquidity management. The warehousing strategy also distracted key management from activities in the core business, including assessing new contracts and the maximisation of the efficiency of our transport network. Meanwhile, increasing levels of profits were being generated from the recognition of development receipts as income in the period received.

The aggressive growth of the last few years led to higher working capital requirements. The combination of high growth and the reliance upon ware- house development income, which was at times unpredictable, contributed to the liquidity issues encountered in the second half of FY19. A lack of rigour in managing liquidity meant that these issues presented without due warning to the Board.

A significant amount of Board time was then spent in addressing these issues, devising a strategy, dealing with potential bidders and ultimately in securing the necessary funding from DBAY. This task was exacerbated by the significant accounting matters identified in the period.

Following the DBAY transaction a new board and leadership team at the Eddie Stobart business holding company level has been put in place led by Executive Chairman William Stobart, its former COO and CEO.

The business is being reviewed by the new leadership on an ongoing basis and while the COVID-19 pandemic has slowed implementation of some initiatives, the Eddie Stobart business has been able to accelerate steps taken in other areas, including the purchase of the “Eddie Stobart” and “Stobart” brands and the removal of two warehouses and the associated lease costs from the portfolio.

3 Eddie Stobart Logistics plc Annual Report and Accounts 2019

Business and Financial Review continued

Financial processes and controls are being improved with the addition of strong new financial oversight, with further improvements to be put in place. Management time is being spent on the core business, including assessing new contracts and ensuring that each group company is being adequately rewarded for the services it delivers.

The different operating businesses are described below:

• Eddie Stobart Limited is a leading supplier of logistics solutions to UK businesses encompassing road transport, rail and warehousing services. The road transport business operates a unique, technology enabled, pay-as-you-go model utilising a shared-user network to maintain high levels of service while delivering cost effective solutions to customers. The rail offering integrates with the road transport operations and allows customers more choice in how we transport their products to market while warehouse operations offer technology led storage and handling solutions to customers on both an open and closed book basis.

• The long-established European operations, headquartered in Belgium, provide automotive and general cargo transport and warehousing services. The business supports major car manufacturers, delivering and collecting vehicles from factories and dealerships in the United Kingdom, Benelux, Czech Republic, France and Germany. Up to 10,000 vehicles can be accommodated at the site in Genk. The general cargo business provides Europe-wide transport services to major brands. The warehousing business provides cross-dock and European fulfilment services for international customers in the e-commerce sector.

• iForce is a leading UK-based e-commerce related logistics services provider active in warehousing, fulfilment and returns management and also provides various add-on services such as carrier optimisation for transport requirements. iForce’s proprietary software, developed in-house and used by all its customers, is central to its business. This software manages logistics optimisation, including packaging and the selection of carrier, as well as track and trace and returns management, an increasingly important service for e-commerce focussed retailers. iForce’s operational expertise and consulting skills, combined with this leading technology, enable bespoke services to be provided to customers.

• The Pallet Network (TPN) offers palletised freight distribution in the UK, Ireland and internationally through its network of more than 100 members, each of whom is an independent transport company, with over 120 depot locations in the UK.

• The Logistics People (TLP) is a recruitment agency providing part-time and full-time drivers and warehousing staff. With a large pool of potential staff, the business provides workers for on average c. 4,800 driving and 1,300 warehousing shifts per week, mainly to the Eddie Stobart business.

The results for these businesses are included in the segmental analysis in note 3.

The Eddie Stobart business also holds a 47.5% investment in Speedy Freight, a 24-hour express same or next day delivery service provider operat- ing across the UK for business and domestic customers via a franchise model.

Revenues Revenues for the full year increased by 9.7% to £857.5m compared to £781.5m (2018 restated) in the previous year primarily due to the full year benefit of the acquisition of TPN in 2018. Excluding TPN, like for like revenues were 0.1% less than 2018.

Revenues were impacted by the Company exiting two loss making contracts in our MIB and Retail sectors. Excluding this impact year on year growth was 14.3% and all sectors other than MIB continued to grow during the period. The Company continued to deliver excellent service to its customers and generated organic growth from existing customers while also winning new business.

The annualised, full year benefit of new contract wins in the year was £27.4m. The high level of new contract wins and renewals demonstrates the continued attractiveness of the business model to customers.

Revenue by sector 2019 Weighting Restated 2018 Weighting Growth Revenue by Sector £m % £m % % Retail 243.4 28.4% 237.6 30.4% 2.4% Consumer 236.5 27.6% 179.7 23.0% 31.6% E-Commerce 187.7 21.9% 169.5 21.7% 10.7% Manufacturing, Industrial & Bulk (MIB) 169.1 19.7% 189.3 24.2% (10.7%) Non sector specific 20.8 2.4% 5.4 0.7% 285.2% Revenue 857.5 100.0% 781.5 100.0% 9.7%

4 Annual Report and Accounts 2019 Strategic reportStrategic

Three of our four customer sectors grew in comparison to last year:

• Retail revenue grew 2.4% to £243.4m (2018: £237.6m) driven by the full year impact of the acquisition of TPN. Revenue from the underlying

business (excluding TPN) decreased by £34.9m, resulting from lower revenues partly resulting from the exit of a loss making contract. Governance We secured new contract wins with major retailers during the year worth £6.0m per annum.

• Consumer revenue was £236.5m (2018: £179.7m), a 31.6% increase compared to 2018, with contract wins worth £4.0m. We also continued to grow existing customer volumes with nine of our ten largest customers delivering year on year revenue growth.

• E-commerce related revenue grew 10.7% to £187.7m (2018: £169.5m). E-Commerce accounted for 21.9% of total Group revenue (2018: 21.7%).

• MIB decreased by £20.2m (10.7%) due to the exit from an underperforming contract during the year.

The Directors believe that a more relevant presentation of the financial results for the period is arrived at by adjusting for certain items, which otherwise could influence the understanding of the underlying trading performance of the Group year-on-year as they are of a non-recurring nature.

By adjusting certain items, a more representative view of the underlying trading performance of the business is arrived at. Financial statements

A full reconciliation of adjusting items to their statutory equivalent is set out in note 4 of the financial statements and definitions for these adjusting items are set out below.

Underlying EBIT1 and underlying EBITDA2, together with net debt and revenue per month and YTD are the primary financial key indicators by which the performance of the business is monitored. EBIT, EBITDA and revenue are assessed against board approved budgets.

Underlying EBIT1 for the 12 months to 30 November 2019 was a loss of £9.9m (2018: profit of £9.0m) which was broadly in line with the Board’s expectations as announced at the time of publication of the Group’s half year results. The underlying EBIT1 was impacted by the growth strategy and increase in the indirect cost base as referred to above. Underlying EBIT1 margin was -1% (-£9.9m) compared to 1% (£9.0m) in 2018 as restated.

Underlying EBTIDA2 for the year was £0.04m (0.01%), (2018: £16.8m, 2.1%). Adjusted loss before tax3 was £19.4m (2018: profit of £2.9m). Adjusted loss after tax4 was £11.7m (2018: profit of £3.6m).

Accounting matters The Board recognised in a number of announcements made from July 2019 onwards that results for the 2019 financial year would be impacted by certain accounting-related matters (referred to as ‘adjustments’). These matters were explained in the interim results published in February 2020. Restatement of audited accounts was also required for prior financial periods, and are summarised in note 30.

These adjustments were considered appropriate to reflect a more prudent approach to matters such as revenue recognition (related to customer contracts and property related services), provisions against customer recoveries and other matters such as dilapidations, balance sheet write-offs, lease accounting and cost accruals. There were also adjustments to reflect implementation of new accounting standards and a reconsideration of the decision made in 2017 to consolidate the results of Puro Ventures Limited (‘Speedy Freight’). The total impact of these adjustments on underlying EBIT for the full year was a reduction of £32.1m.

1 Underlying EBIT is defined as profit from operating activities before exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the income statement relating to the management incentive plan and long-term incentive plan, and including the Company’s share of profit from equity accounted investees (and for FY18 also including force majeure and start-up costs associated with contract wins). 2 Underlying EBITDA is defined as Underlying EBIT before depreciation of property, plant and equipment. 3 Adjusted profit/loss before tax is defined as profit/loss before tax adding back exceptional items, amortisation of acquired intangibles, employee share costs funded by previous parent holding group, charges to the income statement relating to the management incentive plan and long term incentive plan (and for FY18 also including force majeure and start-up costs associated with contract wins). 4 Adjusted profit after tax is Adjusted profit before tax less tax

5 Eddie Stobart Logistics plc Annual Report and Accounts 2019

Business and Financial Review continued

The key adjustments impacting the full year results (all of which were Restatements of results for FY18, and prior years is required to reflect disclosed in the half year results) are: the items noted above and other historical items. Please see note 30 for further information. (i) Property-related services Under previously adopted policies, the Group attributed all consideration Net Debt Restated received from third parties in connection with combined lease and 2019 2018 property consultancy transactions (where the Company provides Net Debt £m £m consultancy services and advice to companies with whom they also enter into long-term lease commitments) to property consultancy services. Finance leases 17.7 9.7 Bank loans 128.2 126.3 Since 2016, such consultancy services were provided as part of the Invoice discounting facility 78.0 37.8 Group’s expansion of its warehouse footprint and capacity as it focused Overdraft / (cash) (9.4) (14.2) on developing a full-service logistics business aligned to the needs of its road transport and e-commerce focused customers. In recent years Net Debt 214.5 159.6 (excluding the 2019 financial year) a material proportion of the Group’s profits were derived from opportunities afforded by this expansion, with During the year under review, the net debt increase of £54.9m (2018: the Company acting as anchor tenant for completed developments and £50.1m) was driven by cash outflows on purchases of property, plant receiving income from property consultancy services relating to equipment and intangibles (net of sale proceeds) of £16.3m (2018: development activities (including consultancy advice on process, £13.9m), exceptional costs of £12.3m (2018: £8.5m), interest payments planning, facilitation and debt structuring). The Board considered these of £8.8m (2018: £7.1m), tax payments of £8.1m (£3.4m), dividend activities to be integral to the Group’s logistics activities and accounted payments of £18.1m (2018: £21.6m) and new finance leases of £11.9m for them as such. (2018: £nil). Cash outflow generated from operating activities was £0.2m (2018: £4.7m) and property related activity inflow was £21.3m (2018 Having reconsidered the relevant accounting guidance, the Group has £19.8m). determined that a more appropriate way to account for these combined lease and consultancy services transactions is to treat all the Post year end the DBAY transaction injected £50m1 of cash by way of consideration as a lease incentive and allocate no revenue to loan notes and an increase of £20m in available facilities was agreed to consultancy services. The amount received in relation to these activities fund working capital in the Eddie Stobart businesses. The new is then recognised over the life of the relevant lease. This also means leadership team of the Eddie Stobart business have informed the that in future years, recognised lease costs are lower than would have Company that they remain confident that these businesses are been the case under the previously adopted policies. sufficiently funded.

This accounting treatment negatively impacted expected returns in FY19 The bank loans, finance leases and other external funding remained with by £18.1m and approximately £17m and £33m derived from such the Eddie Stobart business as part of the DBAY transaction. activities for the 2017 and 2018 financial year respectively and approximately £13m prior to financial year 2017 has been reversed and Financing costs restated, and the amounts received related to these activities recognised Net finance expense increased in the year from £6.1m to £9.5m. This over the life of the relevant leases. This resulted in a reduction in reflects the increased borrowings of the Group and the movement in the previously reported EBIT in those years and a net adjustment to the market value of the swap liability, see note 20. Group’s net assets at 30 November 2018 of £60.6m, exclusive of an estimated tax reduction of £11.5m reflecting the benefit of the There were £1.7m of exceptional finance costs in the year relating to amortisation of lease incentives on unexpired leases entered into in the past. the acceleration of the amortisation of bank fees on the legacy banking facilities prior to the transaction with DBAY which took place in (ii) Speedy Freight consolidation December 2019. In 2018 we incurred £0.5m in repaying the pre-existing Following the acquisition in 2017 of 50 per cent2 of the shares of Puro TPN financing facility at the time of the acquisition. Ventures Limited, which trades as Speedy Freight, it was determined that the Group exercised control over the business based on a number of Further details are included in note 8. factors including the on-going contractual arrangements with the other shareholders, which included put and call options. Consequently, the Exceptional items results of Speedy Freight were fully consolidated in the audited financial Restated statements of the Group in FY17 and FY18. 2019 2018 Exceptional items £m £m This judgement has been reconsidered and it has been determined that Deferred consideration associated with a more appropriate treatment is to account for Puro Ventures Limited acquisitions 4.3 2.8 as an associate and therefore not to consolidate its results, in line with Fees associated with acquisitions - 1.9 the requirements of the accounting standards. This has had a negative Impairment charge 169.2 - impact on the underlying operating EBIT for FY19 of £1.0m and for FY18 Property asset impairment and onerous lease of £1.0m. The Company’s consolidated results for FY18 are restated to provision 6.4 - reflect this. Software impairment and associated exit costs 7.4 - (iii) Other accounting adjustments Costs incurred relating to DBAY disposal 9.2 - A number of other accounting adjustments relating to provisions in Specialist vehicle onerous lease provision 3.1 - connection with underperforming contracts, lease accounting, Restructuring costs 0.6 0.4 dilapidations and cost accruals and implementation of new accounting Total Exceptional Costs within standards have adversely impacted earnings for HY19. Administrative expenses 200.2 5.1

1£50m net of £5m retained in Marcelos Limited relating to transaction costs 2(Following the acquisition the Group’s shareholding had been reduced to 47.5 per cent due to a share issue and re-classification but the Group retained 50 per cent of the voting rights).

6 Annual Report and Accounts 2019 Strategic reportStrategic

The total exceptional costs within administrative expenses for the year were Dividends £200.2m (2018 restated: £5.1m), largely driven by an impairment charge of The Company did not pay an interim dividend (2018: £5.8m) and no final £169.2m that was included in the interim results published in February 2020. dividend is being recommended (2018: £18.1m) The Group was required to undertake an analysis of impairment of its goodwill and assets due to impairment indicators present during the review Earnings per share of its interim results. Impairment testing was undertaken on the Group’s Underlying basic and diluted earnings per share are both (3.1) pence balance sheet at 31 May 2019 which involved applying revised discount (2018 restated: 1.0 pence). Statutory basic and diluted earnings per share Governance factors and taking into account appropriate sensitivities on the forecasted are both (61.0) pence (2018 restated: 5.9 pence). profitability of the group. As a result a total impairment of £169.2m was recognised across General Transport (£150.0m) and iForce (£19.2m) Cash Acquisitions Generating Units (CGUs). Further analysis of impairment at the year end did These amounts represent deferred payments linked to conditions agreed not give rise to an adjustment to the impairment charge recognised in the at the time of the relevant acquisitions and are accounted for within first half. See note 13 for full analysis. exceptional items.

Of these costs, £174.4m were included in the interim results published in Fees associated with acquisitions were £nil (2018: £1.9m). February 2020. Further exceptional costs were recognised in the second half of the year totalling £25.8m: DBAY transaction In November 2019, the Directors concluded that as a result of the impact (i) The Group incurred £9.2m of costs in relation to exploring Financial statements of challenges faced by the Company as disclosed in public strategic options and the identification and successful conclusion announcements from August onwards, the Group was facing increasing of the transaction with DBAY that was approved by shareholders in difficulty in being able to continue to trade without a significant injection December 2019, resulting in a new ownership structure under which of new liquidity and could become in breach of financial covenants under the Company holds a 49% interest in the Eddie Stobart business as its facility agreements. Having considered other strategic options, the referred to above. Directors recommended the transaction with DBAY that was (ii) The Group recognised specific impairment and other charges of overwhelmingly approved by shareholders in December 2019. This £7.4m in relation to the impairment of assets under construction for transaction, which was completed in early December, involved a £50m1 a specific software development project and related exit costs; due cash injection by way of loan notes, an increase of £20m in revolving to the uncertainty and changes to the business these have been put credit facilities and the Company’s interest in the Eddie Stobart business on hold. The financial benefits of the project will need to be reviewed was reduced to a 49 per cent minority holding. The financial results set after the pandemic and therefore the project does not currently meet out in this report are therefore to some extent historical; going forward the the recognition criteria for an intangible asset. Company will not consolidate the results of the Eddie Stobart business but (iii) The Group recognised £6.4m of impairment and onerous lease will account for its interest in the Eddie Stobart business as an associate. charges against warehouse properties where either the properties were being held for disposal or that the carrying value of assets was below the likely realisable value. Annual general meeting and accounts (iv) The Group also provided for deferred consideration on past The Company’s annual results for the 2019 financial year are being acquisitions of £4.3m during the year (2018: £1.8m) relating to the published later than in previous years due to the impact on the audit acquisition of TPN. process of changes in working practices as a result of the COVID-19 (v) The Group also recognised £3.1m relating to an onerous lease on pandemic. An extension to the deadline for publication of the accounts assets following the exit from an underperforming contract and has been obtained in line with regulatory guidance. The Company held its onerous lease costs incurred on specialist vehicles following the annual general meeting on 30 May 2020 in order to comply with its exit of that contract. These exceptional costs were recognised in the obligations under the Companies Act but due to the legal restrictions on interim results published in February 2020. public gatherings at the time, shareholders were unable to attend.

Further details of exceptional costs are included in note 5.

Tax Restated 2019 2018 Taxation £m £m Loss before tax (238.9) (22.3) Underlying tax at prevailing tax rate (45.4) (4.2) Non-deductible items 33.3 2.8 Adjustments in respect of prior periods (0.2) (0.6) Other 4.6 1.3 Tax as reported (7.7) (0.7)

Effective rate of tax 3.2% 3.1%

The effective tax rate at 3.2% is in line with the prior year. The non- deductible items have increased as a result of the large impairment in the period and also include, deferred consideration, amortisation of the brand and costs relating to employee and management incentive plans.

1£50m net of £5m retained in Marcelos Limited relating to transaction costs

7 Eddie Stobart Logistics plc Annual Report and Accounts 2019

Risk management and principal risks

Risk management framework The Board is ultimately responsible for setting the Group’s risk appetite and overseeing the effective management of risk. The Board has delegated oversight of risk management and internal controls to the Audit Committee.

During the 2019 financial year, day to day risk management was the responsibility of the senior management team. The risk management framework setting out the Group’s risk management’s processes and procedures was reviewed by the Audit Committee annually. The mitigating factors and actions in place for each risk was recorded on a Group level risk register and a report on the review of that register by senior management was submitted to the Audit Committee.

Principal risks In its current form as a ‘cash shell’ with no executive team, the principal risks faced by the Company differ from those faced during the 2019 financial year when the Company was the owner of 100 per cent of the Eddie Stobart operating business. The risk management framework has been updated to reflect the differing nature of the principal risks faced by the Company. These risks are considered by the Directors as part of the strategic debate at each Board meeting.

During the 2019 financial year, when the Company was the holding company of the Eddie Stobart business, the principal risks faced as recorded on the risk register were grouped into the following categories:

Operating environment risk Changes in customer demand for services reflecting changes in consumer behaviors, changes in property-related opportunities and emerging technologies that could change the nature of the logistics sector

People risk Loss of one or more key members of the senior management team or failure to retain and attract experienced and skilled people at all levels across the business

Customer risk Loss of one or more key customers having a material impact on Group revenues

Health and safety risk Risk of harm to people working in the business or who are affected by it

Reputational risk A material incident, such as a natural disaster or a material health and safety incident that could affect public perception of the Company and adversely impact customer relationships

Systems and technical risk A failure or unavailability of a key IT system, unauthorised access or a cybersecurity breach that could have a significant impact on operational or financial performance or reputation

Financial risk Failure to meet financing covenants could result in lack of available funding which could result in the Company being unable to meet its financial obligations;

Legal and regulatory risk Non-compliance with legal and regulatory requirements could result in significant fines, reputational damage (and possibly criminal proceedings)

8 Annual Report and Accounts 2019 Strategic reportStrategic

As the Company continues to explore opportunities to become an AIM investment company, the current principal risks identified by the Board, and corresponding mitigants for the Company, are set out below:

1. Risk 1. Mitigants Governance

Failure to convert to an AIM investment company within the timeframe specified An extension until 9 December of the initial deadline for conversion to an AIM by AIM due to an inability to raise sufficient funds from investors or to obtain investment company has been obtained by the Company. shareholder approval. Advisers have been appointed to assist the Board in developing an appropriate investment strategy to attract investment. Interactions with shareholders are planned to obtain feedback on the proposed strategy prior to finalisation. Effective shareholder communications are planned prior to seeking approval for the conversion to an AIM investment company.

2. Risk 2. Mitigants Financial statements

Changes in the economic environment whether resulting from the COVID-19 The Board monitors developments in the economic environment and other pandemic, the withdrawal of the UK from the EU or otherwise, may adversely factors that may affect investment appetite. Advisers are retained to assist in affect appetite for investment in the logistics sector resulting in a fall in the minimising the impact of adverse changes in the economic environment. Company’s share price and/or inability to secure investment to convert to an AIM investment company (see risk 1 above).

3. Risk 3. Mitigants

Eddie Stobart, the supply chain, transport and logistics group which is the The Board receives regular financial and business performance information Company’s sole investment, may not perform in line with its management team’s from Eddie Stobart under agreed governance arrangements enabling the Board expectations and/or may be adversely affected by an external risk (such as a to closely monitor its investment. Two of the Company’s Directors have been change in economic or operating environment) such that it is unable to provide appointed to the board of Greenwhitestar Acquisitions Limited, the operational to the Company funds needed and/or services required in order for the Company holding company of the Eddie Stobart business, supporting close links and to continue to operate until conversion to an AIM investment company can be information flow between the Company and the group. achieved. An Executive Chairman with strong experience of the logistics sector and who knows the Eddie Stobart business well has been appointed and the Finance function has been significantly enhanced.

Measures have been implemented to reorganise and streamline the Eddie Stobart operations and increase utilisation in the property portfolio which are expected to positively impact the full year results to November 2020.

The strong leadership team is experienced in managing risk in a challenging economic environment.

4. Risk 4. Mitigants

The complexity of the structure of the Company’s investment following The Company retains experienced advisers to assist in ensuring legal and completion of the transaction with DBAY in December 2019 gives rise to a risk of regulatory compliance. The Board is closely involved in addressing any legal or inadvertent non-compliance with legal and/or regulatory requirements. regulatory matters as they arise.

The strategic report was approved by the Board on 4 July 2020 and signed on its behalf by;

Christopher Casey Director

9 Eddie Stobart Logistics plc Annual Report and Accounts 2019

Governance

Board of Directors

Adrian Collins, Non-executive Chairman of the Board Christopher Casey, Non-executive Director

Member of the Audit Committee. Chairman of the Audit Committee and member of the Remuneration Appointed in April 2020. Committee. Appointed in April 2017. Skills and experience: Adrian has worked in the investment management industry for over 40 years most recently at Liontrust Skills and experience: Christopher has over 30 years’ strategic Asset Management where he served as Chairman from 2009 to 2019. financial experience. He was previously a partner of KPMG LLP and its Prior to that he was Managing Director at Gartmore Asset predecessor firms from 1992 until 2010. He has extensive Management where he spent a large part of his career. experience as an audit committee chairman and non-executive director of publicly listed companies. Other roles: Adrian is Chairman of CIP Merchant Capital, Bahamas Petroleum Company plc and Tri-Star Resources plc. Other roles: He is currently Chairman of the TR European Growth Trust plc and a Non-Executive Director of BlackRock North American Income Trust plc, CQS Natural Resources Growth and Income plc, Mobius Investment Trust plc and Life Settlement Assets plc.

Stephen Harley, Non-executive Director Saki Riffner, Non-executive Director

Member of the Audit Committee and the Remuneration Committee. Member of the Audit Committee. Appointed in April 2017. Appointed in February 2020.

Skills and experience: Stephen brings significant international Skills and experience: Saki brings significant experience of the logistics and supply chain expertise to the Board. He spent most of his logistics sector having led acquisitions and managed logistics-related 42 year career with Ford in logistics and supply chain management investments by DBAY such as the acquisition of TDG plc which was and held the most senior positions in this area as executive director for later sold to Norbert Dentressangle (now part of XPO Corp.). Saki also global material planning and logistics and for parts supply and brings a deep understanding of the Company’s operations having logistics. been closely involved in the listing of the Company on AIM in 2017 following the acquisition of the Eddie Stobart business by DBAY in Other roles: Stephen is currently Managing Director, Advance 2014. Manufacturing for Laing O’Rourke. Other roles: Saki is Chief Investment Officer and co-founder of DBAY Advisors Ltd. Prior to his current role Saki worked for Rothschilds and Laxey Partners.

10 4 July2020 Chairman Collins Adrian Further informationabouttheworkofBoard,AuditCommitteeand RemunerationCommitteein2019issetoutonpages12to17. into accounttheinterestsofourshareholdersandotherstakeholders. move forwardandourgovernanceevolveswewillcontinuetobeopentransparentabouthowmanagebusinesstake and transparentaboutthechallengesithasfacedin2019.Muchofthisgovernancereportcovershowthesewereaddressed.Aswe upholding highethicalstandardsthatsetthetoneforhowweexpectcompaniesinvestintodobusiness.TheCompanyhasbeenopen The culturewepromoteatBoardlevelandwithinthebusinessesCompanyinvestsinwillbekeytothissuccess.Thisiscommitted decisive actionattherighttimebasedoninformation. support theCompanyinsettingandreviewingitsstrategy, monitoringitsperformance,understandingrisksandopportunities,taking successful achievementoftheCompany’snewstrategy. BywhichImeanmakingsurewehaveinplacepracticesandendorsebehavioursthat As Chairmanoneofmykeyresponsibilitiesissupportingandpromotingtheevolutionthisgovernanceframeworktoensureitsupports to supportgoodbusinesspracticesinthewayCompanymakesandmonitorsitsinvestmentdecisions. As theCompanymovestowardsaneweraasanAIMinvestmentcompany, itsgovernancewillevolvetorecognisethenewroleofBoardand astheCompanydoesnothaveachief executiveoranteam,thescheduleofmattersreserved totheBoardanddocument • thetermsofreferenceAuditandRemuneration Committeeshavebeenrevisedasdescribedonpage 12;and • arrangementshavebeenagreedforthe managementofpotentialconflictsinterestthatmayarisein connectionwithSakiRiffnerand • To reflectthisnewstructure; the Companyunderatransitionalservicesagreement. completion, theCompanyhasnothadanexecutiveleadershipteam oranyemployees.AsubsidiaryofGWSAprovidesoperationalservicesto Therefore,sincethedateof and thetwoformerExecutiveDirectorsemployedbyCompanytransferred tobecomeemployeesofGWSA. Upon completionoftheDBAY transaction,thecompaniesthatemployEddieStobartworkforce ceasedtobesubsidiariesoftheCompany Saki Riffner, ChiefInvestmentOfficerofDBAY, whoisaDirectoroftheCompanyalsodirectorGWSA. board oftheholdingcompanyEddieStobartbusinessandStephen HarleyhasbeenappointedadirectorofGWSAtofulfilthatrole. management informationandtoapproveanyrelatedpartytransactions withDBAY. TheCompanyalsohasarighttoappointdirectorthe relation totheconductofbusinessultimateholdingcompany oftheEddieStobartbusinessanditssubsidiaries,rightstoreceive relation totheDBAY transaction,ashareholdersagreementhasbeen entered intounderwhichtheCompanyhascertainrightsincludingin company oftheEddieStobarttradingentities,asillustratedonpage 2.AsdescribedinthecircularsenttoshareholdersNovember2019 Following completionoftheDBAY theholding transactioninDecember2019,theCompanyholds,indirectlya49percentinterestGWSA, The corporategovernancestatementisavailableontheCompany’swebsiteatwww.eddiestobart.com. found. Governance Codeduringthe2019financialyearandwhererelevantdisclosuresmadeinaccordancewithQCAcanbe The Companyhaspublishedacorporategovernancestatement,whichexplainshowthesatisfiedrequirementsofQCA current status.Pleaseseebelowandpage2inrelationtotheCompany’sstructuregovernancestructure. The BoardintendstocontinuecomplywiththeQCACodeinsofarasprinciplesremainappropriatelightoftheCompany’s listed company, throughoutthefinancialyearended30November2019. The CompanycompliedwiththerequirementsandrecommendationsofQCAGovernanceCode,whichisconsideredappropriateforanAIM Code compliance been updated. setting outthedistinctionbetween therolesofChairmanandChiefExecutive,thatwereinplace duringthe2019financialyear Stephen Harleybeingdirectorsof GWSA andDirectorsoftheCompany, asdescribedonpage15; Chairman’s Governance Statement Governance Structure Annual Report and Accounts 2019 Accounts and Report Annual , have 11

Financial statements Strategic report Governance Eddie Stobart Logistics plc Annual Report and Accounts 2019

The Board

Role of the Board The Company has however published on its website a document The role of Board is to consider and approve the Company’s strategy, describing the role of its Non-executive Chairman. budget, material transactions and corporate actions and oversee the Company’s progress towards its strategic objectives. Skills and experience The Board members bring a wealth of commercial and financial expertise Board members to the Board from a variety of backgrounds. Please see the biographies of The Board is comprised of four Non-executive Directors, three of whom the Directors on page 10 for further information on their skills and are considered to be independent. Two of the independent Non-executive experience. Directors, Christopher Casey and Stephen Harley, were appointed shortly before the IPO in April 2017. The Directors believe the Board has an appropriate mix of skills and experience. Each Director is aware of the importance of keeping their skills Adrian Collins was appointed independent Non-executive Chairman in up to date. During the 2019 financial year, members of the senior April 2020. Saki Riffner, Chief Investment Officer of DBAY Advisors Ltd was leadership team provided industry specific updates and the Company appointed in February 2020. The Directors have determined that, given the Secretary provided briefings on developments in corporate governance size of the Board, it is not appropriate to appoint a senior independent and the regulatory framework. Advisers have also provided briefings on non-executive director. regulatory obligations.

Independence of Directors is reviewed annually and the Board has Time commitment determined that each of the Directors demonstrates strong independent The time commitment expected of the Non-executive Directors is judgement. In the light of Saki Riffner’s role with DBAY the Board has commensurate with the size and complexity of the Company and as concluded that he should not be considered independent. No other necessary to properly perform their duties. Attendance at a minimum of Director has a relationship that could materially interfere with the exercise twelve Board meetings a year and the Annual General Meeting is expected of their independent judgement. when appropriate.

Other Directors during the 2019 financial year were Philip Swatman from Board Committees April 2017 until completion of the DBAYtransaction, Sebastien The Board has established an Audit Committee and a Remuneration Desreumaux, Chief Executive from August 2019 until completion of the Committee. Given the size of the Board it is not considered necessary to DBAY transaction, Anoop Kang, Chief Financial Officer from April 2019 until establish a Nomination Committee. completion of the DBAY transaction, Alex Laffey, Chief Executive Officer from May 2015 until August 2019 and Damien Harte, Chief Financial During the 2019 financial year, each of the Non-executive Directors was a Officer from December 2016 until March 2019. member of the Audit Committee and the Remuneration Committee and Executive Directors and members of senior management attended Throughout the 2019 financial year there was a clearly documented meetings of the Committees at the invitation of the relevant Chairman. division between the executive role of the Chief Executive and the role of Since the completion of the DBAY transaction, all Non-Executive Directors the Non-executive Chairman. Since the completion of the DBAY continue to be members of the Audit Committee and Christopher Casey transaction, the Company has not had a Chief Executive and there is and Stephen Harley are the members of the Remuneration Committee. As therefore no current document setting out a division of responsibilities. noted above, the terms of reference of these committees, which are available on the Company’s website, have been updated to reflect the evolving governance structure of the Company.

Board The Board is responsible for the Company’s strategy.

Audit Committee Remuneration Committee Executive leadership team The Audit Committee has responsibility, in The Remuneration Committee has Following completion of the DBAY relation to the Company, for: responsibility for; transaction, the Company does not have an executive leadership team or any • Monitoring the integrity of the financial • recommending to the Board the employees.3 statements of the Company remuneration of the Company’s • Advising on appropriate accounting Non-executive Directors; and policies and reviewing management • liaising with any company in which the judgements Company has a direct or indirect • Reviewing risk management policies; shareholding on any remuneration or • Approving the external audit plan and incentivisation policies or reviewing the effectiveness of the arrangements, if requested.2 external auditor; and • Monitoring the provision of services by third parties.1

1 During the 2019 financial year the Audit Committee also had responsibility for matters relating to its subsidiaries and their accounts, group-wide policies and controls and internal audit services. 2 During the 2019 financial year the Remuneration Committee also had responsibility for determining the Company’s policy framework for the remuneration of its executive directors and members of senior management; and approving the design of any incentive schemes and the targets for any performance related schemes. 3 During the 2019 financial year, the Board had delegated the authority to manage the day-to-day operations of the Company to the Chief Executive. Authority in relation to financial matters was delegated to the Chief Financial Officer. The Executive Leadership team supported the Chief Executive in discharging his responsibilities in relation to implementation of the Group’s strategy and management of the day to day operations of the Group.

12 A Laffey S Desreumaux A Kang D Harte S Harley C Casey Current Directors Director* financial yearthattheywereentitledtoattendasmembers illustrates attendancebyDirectorsatscheduledmeetingsinthe2019 meetings theywereentitledtoattendduringtheyear. Thetablebelow regular scheduledmeetings.AllDirectorsattendedallBoard to facilitateBoardoversightasmattersrequiredattentionbetween financial yearended30November2019andad-hocmeetingswereheld called whenneeded.Twelve scheduledBoardmeetingswereheldinthe Board meetingsarescheduledtobeheldmonthlywithadhoc Board andCommitteemeetingsattendance business, andemployees,ofthechallenges beingfaced. senior membersoftheleadershipteamtounderstandimpacton the Board membersalsospentasignificantamountoftimeliaisingwith stepstofacilitatethepublicationofCompany’shalf-year results • re-assessmentofaccountingpoliciesandpractices • promptdisclosuretothemarketofmaterialdevelopmentsinrelation • responsestothirdpartieswhoexpressedaninterestinmaking • potentialstrategicoptionsavailabletotheCompany, suchasan • discussionswiththeCompany’slendersandothercreditors; • reforecastsoffinancialperformanceandcash-flowmodels • theappointmentofanewChiefExecutivefollowingdeparture • Company andaddressedmatterssuchas: present, astheBoardconsideredstrategicoptionsavailableto meetings wereheld,attimesonadailybasisandoftenwithadvisors to theregularscheduledBoardactivitiesoutlinedbelow, frequent following thesuspensionofCompany’ssharesinAugust.Inaddition management issuesaswellthesignificantchallengesarising time toaddressingtheCompany’semergingperformanceandcash In thesecondhalfof2019,Directorsdevotedasignificantamount Board activities 5 4 3 2 1 toattendasmembers. + Note:* All DirectorsattendedallBoardmeetingsandCommitteetheywereentitled P Swatman Former Directors werenotmembersoftheAuditor The Chief Executive andChiefFinancialOfficer and re-admissiontotradingoftheCompany’sshares. management judgementsinrelationtoaccountingmatters;and made bythirdparties,asappropriate; to theCompany’sfinancialandoperationalpositionapproaches Company; offer fortheCompanyorotherwiseprovidingfinanceto stakeholders includingshareholders,employeesandsuppliers; equity raiseorbusinesssale,takingintoaccounttheinterestsofall consequential liquidityandcovenantcompliance; the formerChiefExecutiveinAugust2019; Chair oftheCommittee. Remuneration CommitteesbutattendsomeCommitteemeetingsattheinvitationof S Desreumaux was a Director from August 2019 until completionoftheDBAY until S DesreumauxwasaDirectorfromAugust2019 transaction. oftheDBAY April2019untilcompletion from wasaDirector A Kang transaction. D HarteceasedtobeaDirectorinMarch2019. A LaffeyceasedtobeaDirectorinAugust2019. oftheDBAYP SwatmanceasedtobeaDirectoruponcompletion transaction. + 4 + 3 + 2 1 + 5 Board Board 12 12 12 3 9 5 8 ui omte Remuneration Committee Audit Committee ui omte Remuneration Committee Audit Committee n/a n/a n/a n/a 4 4 4 n/a n/a n/a n/a 2 2 2 of May).Shareholderswereinvitedtoraiseanyquestionsbyemail. Meeting (whichtheCompanywaslegallyobligedtoholdbeforeend was unabletoinviteshareholdersattendthisyear’sAnnualGeneral Unfortunately, pandemic,theBoard duetotheimpactofCOVID-19 opportunity toraisemattersattheAnnualGeneralMeeting. meet withinvestorsonrequestandshareholdersgenerallyhavethe opportunity toraisequestionsandinteractwiththe Directors. Directors The Boardcontinuestobecommittedgivingshareholdersthe Officer atthattime. potential investors,alongsidetheChiefExecutiveandFinancial Directors werecloselyinvolvedinengagingwithshareholdersand listen totheirviews.Duringthesecondhalfof2019,Non-executive Board alsocontinueditspracticeofmeetingwithinstitutionalinvestorsto by theCompanyandstepsbeingtakentoaddressthoseissues.The practicable, ofallmaterialmattersrelatingtothechallengesbeingfaced particular onkeepinginvestorspromptlyinformed,totheextent Board’s role.Duringthe2019financialyear, theBoardfocusedin Effective communicationwithinvestorsisanimportantpartofthe Interactions withinvestors considered furtherandtakenforwardbythenewChairman. assessment ofviewsandsuggestedactionsfromtheevaluationwill be of skillsandexperiencetooperateeffectivelygoingforward.The was alsoconcludedthattheBoardanditscommitteeshaveright mix impacted the2019andprioryears’resultswereproperlyaddressed. It external auditorstoensuretheaccountingrelatedmatterswhich shareholders andotherstakeholdersworkedconstructivelywith with contributionsfromadvisors,toseekprotecttheinterestsof the majorchallengesfacedbyCompanyin2019,acteddecisively, The evaluationfoundthatoveralltheBoardwasfelttohaveconfronted quality ofinformation. Committees includingsize,skillsandexperience,focusonstrategy and range offactorsrelevanttotheeffectivenessBoardandits effective decision-makinggoingforward.Thequestionnairecovereda Company andthegovernancestructurethatwouldbestsupport needed fortheBoardtooperatesuccessfullyinthisnewera focused onidentifyingtheskills,experienceandpersonalcharacteristics In additiontoareviewofthe2019financialyear, theevaluationprocess a questionnairebasedapproach. internal interview-basedevaluationprocessshouldbeconductedusing evaluation processwouldbeoflimitedvaluethisyearandthatan and newstrategytheBoardagreedthatanexternallyfacilitated In thelightofrecentchangestoBoardandCompany’sstatus Performance evaluation The Company’sdividendpolicy. • The external marketenvironmentincludingtherisksandopportunities • Approval of2018annualreportandaccounts; • Appointment ofanewChiefFinancialOfficer; • Property-related opportunitiestosupportbusinessgrowth; • Strategic initiativestoimproveefficienciesandstreamlineoperations; • Business pipelineandfutureopportunitiesincludingforacquired • Updates onbusinessactivities,includingimplementationofnew • Annual budgetandmonitoringperformanceagainstbudget; • Strategy andprogresstowardsstrategicobjectives; • Scheduled Boardactivitiesin2019includedreviewandconsiderationof: as aresultofthereferendumtoleaveEU; and businesses toworktogether; contracts, andfinancialperformance; Annual Report and Accounts 2019 Accounts and Report Annual 13

Financial statements Strategic report Governance Eddie Stobart Logistics plc Annual Report and Accounts 2019

Audit Committee report

Audit Committee • Approving the audit plan for the 2019 financial year and considering Christopher Casey is Chairman of the Audit Committee and the other three the findings of the external auditor for the financial year ended Non-executive Directors are members of the Committee. A majority of the 30 November 2018; members are therefore independent. During 2019 all Non-executive • Progressing the development of the 2019 internal audit plan and Directors, all of whom were independent, were members of the Committee. considering internal audit reports; • Reviewing and considering principal risks faced, risk management Christopher Casey is the member identified as having ‘recent and relevant and internal controls; financial experience’. • Receiving reports and updates on potential control and legal/ regulatory compliance issues; Meetings and attendance • Considering and investigating where appropriate reports of The Audit Committee met six times during the financial year ended 30 behaviours not aligned with the Company’s values and ethical November 2019. All members attended all Committee meetings. In addition business policies; to the four scheduled Audit Committee meetings, two additional meetings • Receiving reports on specific risk areas such as insurance, were held in the second half of 2019 at which reports were received from operational licenses, health and safety, environmental compliance PwC on progress in relation to the 2019 half year results and relevant and IT; and accounting matters. • Approving polices and statements adopted by the Company such as its treasury policy, conflicts policy, modern slavery act statement and During the 2019 financial year, meetings were usually attended by the Chief gender pay gap report. Financial Officer and the external auditor with other members of senior management attend meetings by invitation. Committee members meet at Significant accounting judgements least once a year without management present and the Committee meets at The Audit Committee considered areas of significant accounting judgement least once a year with the external auditor and internal auditor without in connection with the preparation of the 2019 financial statements, taking management present. into account the views of the Company’s external auditors, including the following: Attendance by Directors at meetings during the 2019 financial year is set out in the table on page 13. (i) Impact of DBAY transaction – the Committee has considered whether the sale of the controlling share of the Eddie Stobart business to DBAY on 9 Activities December 2019 should result in the balance sheet and results of the Much of the Committee’s time in 2019 was spent dealing with the review of trading subsidiaries being presented as discontinued operations in line the 2019 interim results referred to in announcements made by the with IFRS 5. For the disposal group to be classified as held for sale and Company from July 2019 onwards, the outcome of which is summarised presented as discontinued operations the sale must be highly probable. under ‘Accounting Matters’ on page 5 and 6. The sale of the Eddie Stobart business was dependent upon the shareholder vote which occurred on 6 December 2019 and given there Areas of particular focus for the Committee in relation to the Accounting was limited evidence of shareholder voting intention as at 30 November Matters were: 2019 the sale could not be deemed highly probable and therefore the transaction does not meet the IFRS 5 recognition criteria at 30 November (a) to understand the basis on which it was appropriate for the Directors to 2019. re-assess the accounting treatment of transactions or re-assess the judgements made in prior periods accounts; (ii) Determination of Alternative Performance Measures (note 4) - alternative (b) to assess the impact on the financial statements of proposed changes in performance measures, such as underlying results, are used in the the treatment of individual balances or transactions upon the 2019 full day-to-day management of the Group, and represent statutory measures year and half year results and the impact on, and restatement of, past adjusted for items which, in the Directors’ view, could influence the periods’ results; understanding of comparability and performance of the Group year on (c) to assess the impact of new accounting standards impacting the Company’s results for the first time in the 2019 financial year; and year. These items include amortisation of acquired intangibles, share of (d) to satisfy itself and the Board that it was reasonable to conclude that all profit from equity accounted investees, employee share scheme costs material accounting matters requiring reassessment had been identified which were fully funded by the previous parent holding Group, exceptional during the review. costs, and in the prior year, start-up costs associated with contract wins and the profit impact of severe weather conditions. The Chairman of the Audit Committee spent a significant amount of time outside formal meetings liaising with PwC and the Finance team to better (iii) Assessment of Agent versus Principal in considering whether to understand, and where possible resolve, outstanding issues in order to recognise revenue gross or net – judgement is required when facilitate publication of the 2019 interim results. determining whether an entity is acting as an agent or principal based on an evaluation of the risks and responsibilities taken by the entity. In the Upon the conclusion of the review, the Audit Committee determined that it case of The Pallet Network Limited, the operating model has a number of was appropriate to recommend to the Board a more prudent approach to mixed indicators. It is the view of management that the key determining the application of certain accounting policies and management judgements factors such as the responsibility for the delivery of services and the which impacted the half year and full year results for the 2019 financial year provision of insurance, lead to the conclusion that the business acts as a (and required restatement of results for prior periods) as disclosed in the Principal and therefore the revenue should be recognised gross for this half year results and described in note 30 of this annual report. entity. Other activities of the Audit Committee during the 2019 financial year included: (iv) Assessment of control – for non-wholly owned acquisitions judgement is required in evaluating the facts and circumstances in order to assess and • Reviewing the financial results for the full and half year for approval by the determine whether and when the business has control. In making this Board; determination, Directors look closely at whether the Group has the ability • Considering the appropriateness of preparing the financial statements on to influence the returns generated by the investee through being able to a going concern basis; direct its activity and also whether the investee is exposed to variable • Recommending the appointment of PricewaterhouseCoopers LLP as the rates of return. Company’s auditor;

14 further action if considered appropriate. further actionifconsideredappropriate. these policiesarereportedtotheChairmanofAuditCommitteefor concerns aboutinappropriatebehavioursormalpractice.Anyreportsunder employees andprovidedamechanismtosupportinraising any respectively setoutthestandardsofbehaviorinbusinessexpected business policyandawhistleblowingwereinplaceduring2019which internal reviewstoassesscompliancewithpolicies.Anethical The AuditCommitteecontinuedtoreceivereportsfromtheHSQAteam on protection legislation.Aninternalauditcharterfortheyearwasagreed. salary-related benefitsystemandtheGroup’scompliancewithdata effectiveness ofcertainprocessesandcontrolsinrelationtoanew significant projects.BDOalsoreviewedthedesignandoperational subsidiaries, certainhumanresourceprocessesandgovernancearound including inrelationtocorefinancialandITcontrolswithinstand-alone services andconductedinternalauditsasagreedwiththeAuditCommittee During the2019financialyear, BDOcontinuedtoprovideinternalaudit a significantminorityshareholder. for theEddieStobartbusinesseswithwhomwewillliaiseinourcapacityas November 2019.TheBoardofGWSAhasputinplaceanAuditCommittee as itrelatestothefinalisationoffinancialstatementsforGroup continued tomonitortheworkofEddieStobartbusinessFinanceteam increased focusoninternalfinancialcontrols.TheAuditCommitteehas appointment ofnewfinanceleadershiptotheEddieStobartbusinessandan Matters. Following theDBAY transaction theAuditCommitteeobserved to preventordetectsomeoftheissueswhichgaveriseAccounting It becameapparentthatthecontrolenvironmentwasnotsufficientlyrobust internal auditsundertakenbyBDOLLP. (HSQA) team,presentationsfromseniormanagementonriskareasand particular assuranceworkdonebytheHealth,Safety, QualityandAssurance sources ofinternalassurancefromwithintheEddieStobartbusiness,in undertaking itsreviews,theCommitteewassupportedbyanumberof and notabsoluteassuranceagainstmaterialmisstatementorloss.In of failuretoachievebusinessobjectives,andcanonlyprovidereasonable management systemsaredesignedtomanageratherthaneliminatetherisk including financial,operationalandcompliancecontrols.TheGroup’srisk system in2019totheAuditCommittee.Thiscoveredallmaterialcontrols Group’s systemsofinternalcontrolandoversightitsriskmanagement The Boardhaddelegatedresponsibilityforreviewingtheeffectivenessof Risk management,internalcontrolsandaudit 2020. LLP bere-appointedasauditorforthefinancialyearending30November 2020. TheAuditCommitteehasrecommendedPricewaterhouseCoopers remains independentandisbestplacedtoconducttheCompany’sauditfor subsidiaries, theCommitteeconcludedthatPricewaterhouseCoopersLLP results andfactthatPwCauditsthestatutoryaccountsofGWSAits work doneinthe2019financialyearrelationtoreviewofinterim factors includingthechangeinauditsigningpartner, theamountofnon-audit Having conducteditsannualreview, whichtookintoaccountanumberof The AuditCommitteeoverseestherelationshipwithexternalauditor. External auditor For furtherinformationseeapplicablenotestothefinancialstatements. (v) Prior yearadjustments–considerationoftheaccountingmattersgiving advice asrequired.Further detailsofthesemattersaresetoutinnote 30. reviewing papersinrelationtotheseadjustmentsandtakingnecessary rise toprioryearadjustmentsatboththehalfandfullyear. Receivingand conflicts protocolagreedbetweentheCompanyandGWSA. conflict ofinterestinrelationtothisroleismanagedunderaninformationand appointment totheBoardofGWSAasreferredonpage1.Thepotential Stephen Harleyisconsideredtobeindependentnotwithstandinghis GWSA. managed pursuanttoaprotocolagreedwithbetweentheCompanyand The potentialconflictofinterestinrelationtohisroleasaDirectorGWSAis managed underaninformationandconflictsprotocolagreedwithDBAY. The potentialconflictofinterestinrelationtoSakiRiffner’srolewithDBAY is recommended thatheshouldnotbeconsideredtoindependent. DBAY, andisalsoaDirectorofGWSAtheAuditCommittee independent. SakiRiffnerisarepresentativeofsignificantshareholder, Audit Committee,thatallDirectors,withtheexceptionofSakiRiffner, are Directors. TheBoardhasdetermined,basedontherecommendationof The Committeeundertakesanannualreviewofconflictsinterest Conflicts 4 July2020 Chairman oftheAuditCommittee Christopher Casey for theCompany. management experiencethatwillbeinvaluableaswemoveintoanewera joined theAuditCommitteeandbringmarket,logisticssectorinvestment new Chairman,andSakiRiffner, theChiefInvestmentOfficerofDBAY, have interests inthelogisticssector, asreferredtoonpage2.AdrianCollins,our the Company’sstrategytobecomeanAIMinvestmentcompanywith The roleoftheAuditCommitteewillfurtherevolveasBoardprogresses New Committeemembers control andriskmanagementsystemofanyinvesteecompany the Companyandalsotoseekinformationassuranceaboutinternal control systemandthoseofanymaterialthirdpartyproviderservicesto Company toseekadditionalassuranceabouttheCompany’sowninternal converting toanAIMinvestmentcompany, itislikelytobeappropriateforthe reviewed. TheCommitteerecognisesthatiftheCompanysucceedsin respect oftheCompany’sinternalcontrols.Thisdecisionwillberegularly currently appropriatefortheCompanytoengageaninternalauditorin light ofthisstructuretheAuditCommitteehasdeterminedthatitisnot Inthe a transitionalbasisbyEddieStobartLimited,subsidiaryofGWSA. this annualreport)andoperationalservicesareprovidedtotheCompanyon have anoperatingbusinessoranyemployees(asdescribedonpage11of Following thecompletionofDBAY transaction,theCompanydoesnot Annual Report and Accounts 2019 Accounts and Report Annual 15

Financial statements Strategic report Governance Eddie Stobart Logistics plc Annual Report and Accounts 2019

Remuneration Committee report

Following the completion of the DBAY transaction, the role of the Remuneration Committee is more limited as the Company does not have an operating business and does not have any employees (as described on page 11 of this annual report). The Company’s responsibilities are currently to make recommendations to the Board as to the remuneration of Non-executive Directors and liaise with an investee company on remuneration matters if requested. During the 2019 financial year the Remuneration Committee had a wider role including determining the Company’s policy framework for the remuneration of its executive directors and members of senior management and approving the design of any incentive schemes and the targets for any performance related schemes. This remuneration report focuses on the activities of the Committee and the approach of the Group to remuneration related matters in the 2019 financial year.

Approach to remuneration During the 2019 financial year the Committee aimed to ensure that the remuneration of Directors and senior management supported the delivery of the Group’s strategy. Remuneration packages were set at a level appropriate for the market the Group was operating in whilst taking into account the need to attract and retain talented people. In addition to base salary, the Executive Directors and senior management had the opportunity to receive long term variable reward, dependent on achievement of appropriate performance conditions.

Directors’ remuneration in the year ended 30 November 2019 The remuneration of the Directors during the year ended 30 November 2019 (current and former) is set out below together with comparable figures for the previous financial year.

Salary/fees 1 Benefits 2 Pension costs 3 Long term incentives 4 Total £,000 £,000 £,000 £,000 £,000 Current Directors 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 C Casey 71 70 ------71 70 S Harley 61 60 ------61 60

Former Directors 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 P Swatman 153 151 ------153 151 S Desreumaux 92 - 79 - 13 - - - 184 - A Kang 187 - 36 - - - - - 223 - A Laffey 5 412 407 173 23 - 41 - - 586 470 D Harte 5 265 244 18 15 8 24 - - 291 283

1 This column sets out salary and fees received for the full financial years ended 30 November 2019 and 30 November 2018. No payments were made to Adrian Collins or Saki Riffner who were appointed after the year-end. The increase in pay for Non-executive Directors was in line with the pay increase in 2019 to all employees of Eddie Stobart Limited. 2 Benefits includes private medical insurance, life assurance, car allowance and tax paid by the Company on such benefits. 3 A cash allowance was paid to two of the Directors in lieu of a pension contribution. 4 None of the Directors have received cash under any incentive arrangement in the financial ended 30 November 2019. Awards under the MIP were granted to A Laffey and D Harte in the financial period ended 30 November 2017 but no vesting has taken place and both have surrendered their entitlement under these MIP awards. The charge to the Company in connection with the MIP awards is set out in note 24 to the financial statements. For further information on LTIP awards granted to Executive Directors see page 17. 5 Salary/fees for A Laffey include an amount representing salary and benefits in lieu of notice (see note 5) and for D Harte includes fees of £168k under consultancy arrangements with a subsidiary company after he retired as Chief Financial Officer.

This table has been audited.

Other than as set out in the table above and its footnotes, no other Activities payments were made to any past Director of the Company or in Activities of the Remuneration Committee during the 2019 financial year connection with the exit of any Director. included:

Please see section below headed ‘Our approach to remuneration in 2019’ • Reviewing the Group’s approach to remuneration for information about the remuneration of the Executive Directors in 2019. • Approving the individual packages of Executive Directors including the package agreed with the new Chief Financial Officer starting in April 2019 Membership and the new Chief Executive starting in August 2019 Throughout the 2019 financial year, the Remuneration Committee • Approving the participation of the Executive Directors in the LTIP in the consisted of Philip H Swatman as Chairman and the two other 2019 financial year Non-executive Directors, Christopher Casey and Stephen Harley. • Considering the grant of LTIP awards to members of the senior The current members of the Committee are Christopher Casey and management team in in 2019 Stephen Harley. All members are, and were throughout 2019, therefore • Considering and approving the approach to disclosure of independent Non-executive Directors. remuneration-related matters

Meetings and attendance Our approach to remuneration in 2019 The Committee meets at least once a year and at other times as appropriate. The Committee met once in the 2019 financial year. Long-term incentives As disclosed in our 2018 annual report, the Remuneration Committee determined that it was appropriate for Executive Directors to be granted LTIP awards in 2019 at the time that awards were being granted to other members of senior management. The awards, made in May 2019 to A Laffey and A Kang (as well as other members of senior management), set targets based on performance criteria related to total shareholder return and earnings per share as approved by the Remuneration Committee.

16 November 2019,allofwhichwerebeneficial exceptwherenoted. The tablebelowshowstheinterestsofDirectorsinsharesasat30 Directors’ interestsinshares *Saki RiffnerdoesnotreceiveafeeasNon-executiveDirector • • • Directors areasfollows: As atthedateofthisreport,feespayabletoNon-Executive and EddieStobartLimited. line withthepayincreaseforallemployeesofEddieStobartLogisticsplc other thantheincreasedisclosedin2018annualreportwhichwas There werenoincreasesinsalariesorfeespayabletoDirectors2019 Salaries and nocashbonuseswerepaidundertheintendedscheme. in the2019financialyearwasnoted.Thisschemenotimplemented In the2018annualreport,intentiontointroduceacashbonusscheme Annual bonus LTIP awardslapsed. Asaresult asignificantportionofthe2019 became employeesofGWSA. and theExecutiveDirectorsceasedtobeemployedbyCompany of theseniorleadershipteamceasedtobeasubsidiaryCompany On completionoftheDBAY transaction,theemployingentityofmembers in thatperiod. discretionary shareplansinrelationtoseniorexecutivesoftheCompany ordinary sharecapitalmaybeissuedorcommittedtounder ten yearperiodfromthedateofIPO. Nomorethan5%oftheissued schemes (whichincludestheLTIP andtheSIP(describedbelow))in issued orcommittedtobeunderemployeesharebasedincentive than 10%oftheissuedordinarysharecapitalCompanymaybe In linewithguidelinesissuedbyinvestorrepresentativebodies,nomore been met. lapse in2018,lapsedApril2020astheperformancecriteriahadnot would beachieved.The50percentofthe2017LTIP awardsthatdidnot to totalshareholderreturnoverathreeyearperiodendinginApril2020) target theforvestingofremaining50percenttheseawards(linked year wasnotachieved)anditconsideredhighlyunlikelythatthe (as thetargetofachievementanEBITDA targetforthe2018financial per centoftheLTIP awardsgrantedtoseniormanagersin2017lapsed managers in2019theRemunerationCommitteetookintoaccountthat50 In assessingthegrantofawardstoExecutiveDirectorsandsenior under theMIPfollowinghisretirementon31March2019. former ChiefFinancialOfficerisnolongerentitledtoexercisehisrights an incentiveschemeputinplaceatthetimeofIPO. DamienHarte, award relatingto627,533shares)replacedhisentitlementundertheMIP, granted totheChiefExecutive,AlexLaffey, undertheLTIP in2019(an scheme fortheindividualswhowerethenExecutiveDirectors.Theawards MIP wasconsideredattherelevanttimetobeanappropriateincentive Executive DirectorsdidnotparticipateintheLTIP in2017or2018 asthe financial statements. granted in2019totheExecutiveDirectorspleaseseenote24 For informationontheperformancecriteriaandvalueofLTIP awards appointment asChiefExecutive. iForce). HewasnotgrantedanyfurtherLTIP awardsuponorfollowinghis appointment asChiefExecutiveinAugust2019)whenhewasCEOof Awards weregrantedtoSebastienDesreumauxinMay2019(priorhis £61,200 perannum Non-executive £71,400 perannum Non-executive Director, ChairmanoftheAuditCommittee £80,000 perannum Director* Non-executive DirectorandChairmanoftheBoard P Swatman Non-executive Directors A Kang The appointmentdatesoftheDirectorsaresetoutbelow: months’ noticebyeitherparty. year period,continuingthereaftersubjecttoterminationuponatleastthree The Non-executiveDirectorshavelettersofappointmentforaninitialthree Letters ofappointment (iii) AdrianCollinsisnotinterestedinanysharesoftheCompany. (ii) Saki Riffnerholds1,118,496ordinarysharesof1penceeachinthe (i) there hadbeennochangeintheinterestsofChristopherCaseyand Document; As at30June2020thelatestpracticabledatepriortoapprovalofthis 3 2 1 S Desreumaux Executive Directors note 24of thefinancialstatements. Further information ontheshare-basedincentiveschemes isincludedin became entitledto theirshares. business immediatelypriortocompletion oftheDBAY transaction, Eligible employeeswhoremainedemployed bytheEddieStobart participating employees. acquired 1,687,500sharestobeheld intrustforthebenefitof Link MarketServicesTrustees, anindependentprofessionalbody, which No furtherawardshavebeenmade underthisscheme.Thetrusteewas were incentivisedandtheirinterestsalignedwiththoseoftheCompany. grant offreeshareswasmadetoemployeesinorderensure ShareIncentivePlanwasestablished onIPOanda A UKHMRC-approved Share IncentivePlan(“SIP”) management teaminthe2017and2019financialyears. As notedabove,LTIP awardsweregrantedtomembersofthesenior vesting ofLTIP awards. 24 tothefinancialstatementsfordetailsofperformanceconditions for applicable holdingperiodfollowingvestingofanaward.Pleaseseenote hold applicableordinarysharesontrustfortheLTIP participantforthe received anawardtoappointLinkMarketServicesTrustees Limitedto team byofferingthemnil-costoptions.TheLTIP requiredparticipantswho The LTIP wasestablishedtorewardmembersoftheseniormanagement Long-Term IncentivePlan(“LTIP”) reports andthedocumentationrelatingtoIPO. Details inrelationtotheMIParedisclosed2018and2017annual MIP andnofurtherawardscanbemade. participated. EachofthoseDirectorshassurrenderedtheirinterestinthe of theIPOinwhichExecutiveDirectorsasatdate As notedabovetheMIPwasanincentiveschemeestablishedattime Management IncentivePlan(“MIP”) Share-based incentivesschemes S Harley C Casey S Riffner A Collins S Harley C Casey approximately 27.1percentoftheCompany’sissuedsharecapital; discretionary managementofDBAY AdvisorsLimited,representing interest inthetotalof102,804,300sharesheldbyfundsunder is alsodeemedforthepurposesofAIMrulestoholdabeneficial Given hisroleasChiefInvestmentOfficerofDBAY AdvisorsLimited,he approximately 0.29percentoftheCompany’sissuedsharecapital. capital oftheCompany(“OrdinaryShares”)representing Stephen HarleyinsharesoftheCompany; 10,000 sharesbeneficiallyownedbySHarley’swife 25,500 sharesbeneficiallyownedbyPSwatman’swife. Interests underLTIP awards 1 3 2 1 (appointed 27 February 2020) (appointed Annual Report and Accounts 2019 Accounts and Report Annual Total interest 8,6 0.1% 0.1% 284,264 203,046 (appointed 4April2017) (appointed 8 April2017) (appointed 3 April2020) (appointed 30,000 50,000 in shares 7,500 30 November 2019 share capital as at share capitalasat Percentage of 0% 0% 0% 17

Financial statements Strategic report Governance Eddie Stobart Logistics plc Annual Report and Accounts 2019

Directors’ report

The Directors submit their report and the audited consolidated financial Interests in voting rights statements of Eddie Stobart Logistics plc for the year ended 30 As at 30 June 2020, the latest practicable date prior to the approval of November 2019. this document, the Company had been notified of the following interests held by significant shareholders amounting to 3% or more of the voting Results rights attaching to the Company’s issued share capital: The loss before tax for the year ended 30 November 2019 from Significant Shareholders Percentage of Voting Rights Held continuing operations was £238.9m (2018 restated: £22.3m). DBAY 27% Dividends Stobart Group Limited 11.8% The Company did not pay an interim dividend (2018: 1.54 pence per Invesco Asset Management Limited 3.58% share) and the Directors do not recommend a final dividend for the year (2018: 4.76 pence per share). Employee engagement Our policy during the 2019 financial year was to employ the best people Principal activities, business review and future irrespective of race, gender, nationality, disability or sexual orientation. developments Consultation with employees or their representatives occurred regularly, The Strategic report on pages 1 to 9 describes the principal activities of with the aim of ensuring employees’ views were taken into account when the Company and its subsidiaries during the 2019 financial year, a review decisions are made that are likely to affect their interests. Information on of the business for the financial year ended 30 November 2019 and an the SIP under which many of employees held shares, is given in note 24. indication of likely future developments. Factors affecting the performance of the Company are shared with Directors employees as part of the notifications of half-yearly and annual results and updates about significant events are communicated on the internal The Directors of the Company who were in office during the year and up intranet as well as on noticeboards and in cab devices for the driver to the date of signing the financial statements were: community. C Casey (appointed 18 April 2017) S Harley (appointed 4 April 2017) Disabled employees P Swatman 1 (appointed 4 April 2017) Applications for employment by disabled persons are given full and fair A Laffey 2 (appointed 4 April 2017) consideration, having regard to their particular aptitudes and abilities. In D Harte 3 (appointed 4 April 2017) the event an employee becomes disabled, every effort is made to retrain them in order that their employment may continue. Our policy is that A Kang 4 (appointed 1 April 2019) opportunities for training, career development and promotion should be S Desreumaux 5 (appointed 23 August 2019) available to all employees. Saki Riffner (appointed 27 February 2020) Adrian Collins (appointed 3 April 2020) Health, safety and wellbeing 1 P Swatman left the Company on completion of the DBAY transaction The Board recognises the importance of maintaining high standards of 2 A Laffey left the Company on 22 August 2019 health, safety and wellbeing for everyone working within our business. 3 D Harte resigned with effect from 31 March 2019. 4 A Kang became employed by GWSA on completion of the DBAY transaction and subsequently resigned from the GWSA Board on 17 January 2020 During 2019 the Company aimed to achieve high standards of health 5 S Desreumaux became employed by GWSA on completion of the DBAY transaction and and safety management across all business activities. subsequently resigned on 16 December 2020

Directors’ remuneration, share options, long-term executive plan awards, Financial risk management pension contributions and benefits are set out in the Remuneration Information in respect of the financial risk management objectives and report on pages 16 and 17. The Company has Directors’ and Officers’ policies of the Group is contained in note 20 of the financial statements. liability insurance in place. Political donations Share capital The Group made no political donations during the year. Details of the authorised and issued share capital of the Company are set out in note 23 to the financial statements. Research and development activities Research and development activities were undertaken during the year, Environmental policy predominantly in connection with continued investment in IT systems Maintaining and improving the quality of the environment in which we live and technologies that help us deliver logistics solutions to our is an important concern for the Board. During 2019 the Company customers. maintained its policy of aiming to minimise the Group’s impact on the environment wherever this is practical. Initiatives to reduce fuel Related party transactions consumption by encouraging more efficient driving practices and to Any related party transactions required to be disclosed under the AIM reduce our energy consumption were continued in 2019. The Group also rules are disclosed in note 26 to the financial statements. continues to be a member of the CRC Energy Scheme (formerly the ‘Carbon Reduction Commitment’) under which energy usage is monitored and assessed each year.

18 *as atthedateofpublication ofthisdocumenttheCompanydoesnothaveanybranches 4 July2020 Director Christopher Casey signed byitsorderby; This Directors’reportwasapprovedbytheBoardon4July2020and see note1tothefinancialstatementsonpage33forfurtherinformation. to preparethefinancialstatementsongoingconcernbasis.Please continue inoperationfortheforeseeablefutureandthatitisappropriate The DirectorsaresatisfiedthattheCompanyhasadequateresourcesto Going concern promptly toanyquestionsorissuesraisedbyshareholders. frequent dialogueandmeetingswithkeyinvestorsresponding The Companykeepsuptodatewiththeviewsofitsshareholdersby Engagement withstakeholders note 29). Post balancesheeteventsaredisclosedinthefinancialstatements(see Post balancesheetevents available onourwebsiteatwww.eddiestobart.com. Street London.Allresolutionswerepassedandvotinginformationis The AnnualGeneralMeetingwasheldon30May2020at125OldBroad Annual GeneralMeeting law. Directors outoftheassetsCompanytoextentpermittedby The Company’sarticlesofassociationallowtheindemnification Directors’ indemnities auditor. audit informationandtoestablishthatithasbeencommunicatedthe auditor.taken allreasonablestepstomakehimselfawareofanyrelevant information andtoestablishthatithasbeencommunicatedthe reasonable stepstomakehimselfawareofanyrelevantaudit unaware. EachoftheDirectorshasconfirmedthathetakenall are aware,thereisnorelevantauditinformationofwhichtheauditors The Directorsinofficeon4July2020haveconfirmedthat,asfarthey Disclosure ofinformationtoauditor 100 00Prague201,CzechRepublic Pripotocni 1519/10a, Stobart Automotive 3600 GenkBelgium Eikelaarstraat 28, Stobart AutomotiveBelgium European branchesduring2019financialyear* WA4 4TQ Warrington, Appleton, Langford Way, Stretton GreenDistributionPark, Eddie StobartLogisticsplc(registeredoffice) Annual Report and Accounts 2019 Accounts and Report Annual 19

Financial statements Strategic report Governance Eddie Stobart Logistics plc Annual Report and Accounts 2019

Statement of directors’ responsibilities in respect of the financial statements

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of the profit or loss of the Group and parent company for that period. In preparing the financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently; • state whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company will continue in business.

The directors are also responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and enable them to ensure that the financial statements comply with the Companies Act 2006.

The directors are responsible for the maintenance and integrity of the parent company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

By order of the Board;

Christopher Casey Director 4 July 2020

20 W year thenended;andthenotestofinancialstatements,whichincludeadescriptionofsignificantaccountingpolicies. Equity, theConsolidatedandCompanyStatementsofFinancialPosition asat30November2019,andtheConsolidatedCashFlowStatementfor Consolidated IncomeStatement,theStatementofComprehensiveIncome,andCompanyStatementsChangesin fraud. internal controls,includingevaluating whethertherewasevidenceofbiasbythedirectorsthatrepresented ariskofmaterialmisstatementdueto assumptions andconsideringfuture eventsthatareinherentlyuncertain.Asinallofourauditswealso addressedtheriskofmanagementoverride looked atwherethedirectorsmade subjectivejudgements,forexampleinrespectofsignificantaccounting estimatesthatinvolvedmaking As partofdesigningouraudit,we determined materialityandassessedtherisksofmaterialmisstatement inthefinancialstatements.Inparticular The scopeofouraudit Overview Our auditapproach with theserequirements. whichincludes theFRC’sEthicalStandard,asapplicabletolistedentities,andwehavefulfilledourotherethicalresponsibilitiesinaccordance UK, We remainedindependentoftheGroupinaccordance withtheethicalrequirementsthatarerelevanttoourauditoffinancialstatementsin Independence evidence wehaveobtainedissufficientandappropriatetoprovideabasisforouropinion. ISAs (UK)arefurtherdescribedintheAuditors’responsibilitiesforauditoffinancialstatementssectionourreport.W We conductedourauditinaccordancewithInternational StandardsonAuditing(UK)(“ISAs(UK)”)andapplicablelaw. Ourresponsibilitiesunder Basis foropinion • • • • In ouropinion: Opinion Report ontheauditoffinancialstatements

e haveauditedthefinancialstatements,includedwithinAnnualReportandAccounts2019(the“Annual Report”),whichcomprise:the the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. the financialstatementshavebeenpreparedinaccordancewithrequirementsofCompaniesAct2006. (United KingdomAccountingStandards,comprisingFRS101“ReducedDisclosureF The CompanyfinancialstatementshavebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice by theEuropeanUnion; the GroupfinancialstatementshavebeenproperlypreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadopted of thestateGroup’sandCompany’saffairsasat30November2019losscashflowsforyearthenended; Eddie StobartLogisticsplc’sGroupfinancialstatementsandCompany(the“financialstatements”)giveatruefairview to the members ofEddie StobartLogisticsplc • • • • • Key auditmatters relateto: *Including consolidationjournalentries • • revenue. total of 0.5% on (2018: £1.5 based million), million £4.25 materiality: Group verall • • •

T T reported. to be information the and below detailed risks relevant the including covered, to be areas significant to the as auditors component instructed team Group The purposes. Group for audits scope 6to full subjected we components, reporting 23 Group’s O O O T P Re Ca G tax. before loss Group’s components. the across Group the of profile risk and size and mix to the regard having million, he impact of the Covid 19 pandemic Covid the of impact he 97%* and the of revenue 94%* for Group of accounted work our of scope the within components he to £4.04 million £0.57 from ranged which materialities component the allocated team Group he resentation and disclosure of prior period adjustments oing concern ur audit focused on those entities with the most significant contribution to the Group’s results. Of the the Of results. Group’s to the contribution significant most the with entities those on focused audit ur verall Company materiality: £1.5 million (2018: £225,000), based on 2% of total assets. total of 2% on based (2018: £225,000), £1.5 million materiality: Company verall venue recognition rrying valuerrying of goodwill, intangible assets, tangible assets and investments in subsidiaries Independent auditors’report ramework”, andapplicablelaw); Annual Report and Accounts 2019 Accounts and Report Annual e believethattheaudit , we 21

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Independent auditors’ report to the members of Eddie Stobart Logistics plc continued

Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. We performed the following procedures:

Key audit matter How our audit addressed the key audit matter Going concern

Refer to note 1 (Principal accounting policies) We performed the following procedures:

The Company held 100% of the shares of Greenwhitestar Acquisition • We examined the shareholder agreement between DBAY managed Ltd (“the investee” or “GWSA”) until 9 December 2019, at which point, fund, Marcelos and the Company; the shares were sold to an intermediate holding company of Marcelos • We examined a signed copy of the current loan agreement between Limited (Alpha Cassiopeiae Limited) for a consideration of 49% of the Marcelos and DBAY Advisors Ltd and the irrevocable offer of loan shares in Marcelos Limited, the remaining 51% are owned by Douglas funding made by Marcelos to the Company; Bay Capital III Fund LLP (“DBAY managed fund”) . The Group ceased • We assessed the ongoing expenses, based on forecasts and an to exist at that point. In preparing these financial statements, the understanding of the costs of the Company, to consider whether the Directors have considered the going concern of the Company which funding streams plus the Company’s current working capital position now only holds an indirect 49% interest in GWSA. are sufficient to cover forecast future operating expenses; Subsequent to the disposal of GWSA the Company has been • We assessed the ability of DBAY Advisors Ltd to provide funding to dependent on a funding stream provided by Marcelos via loan enable Marcelos to fulfil its commitment to the Company. agreements. The Directors have considered the sufficiency of the • We reviewed the disclosures in the financial statements. funds available compared to forecast operating costs and are satisfied Based on all of the above, we concluded that there was sufficient evidence that the Company will be able to meet its obligations as they fall due. to support the preparation of the financial statements on a Going Concern basis and that the disclosure provided is sufficient. The Board, therefore, concluded that it was appropriate to prepare the financial statements on a going concern basis.

Carrying value of goodwill,intangible assets, tangible assets and investments in subsidiaries

Refer to note 1 (Principal accounting policies), to note 12 (Property, We performed the following procedures: plant and equipment) to note 13 (Goodwill and Intangible Assets) and to note 2 of the Company financial statements (Significant accounting Group – Value in use impairment test as at 31 May 2019 policies). • We evaluated the appropriateness of revised CGUs adopted by management; The Group recorded an impairment charge of £169m in its interim • We obtained management’s forecasts that had been prepared for the results for the period to 31 May and for the full year to 30 November reporting period to 31 May 2019. 2019. Goodwill and intangible assets of £114m and property, plant and • We assessed the reasonableness of the trading forecasts used at 31 equipment of £63m remain on the consolidated balance sheet at 30 May 2019 and the assumptions underpinning them, within the cash November 2019. Investment in subsidiaries of £45m remain on the flow forecast model in the light of recent trading performance and company balance sheet as at 30 November 2019. suggested material amendments to management that they accepted; • We engaged an internal valuation expert to review the proposed Group – goodwill, intangible and tangible assets discount rates and long term growth rates. We challenged When undertaking the impairment review, determining the cash management on their proposed discount rates and the discount rates generating units (CGUs) required management judgement. finally adopted by management are with the range that we would Management amended the CGUs in FY19 reflecting changes in the expect; way in which the business is run. The value of CGUs was then • We ran sensitivities on individual CGUs, to reflect lower than compared to the estimated recoverable amount. budgeted growth, cost savings and pressure on margins to assess Ascertaining the recoverable amount for each CGU required estimates the impact of the recoverable amounts of management’s to be made of key inputs in the value in use calculation including assumptions not being met; budgets, forecasts, discount rates and long term growth rates. Based on the above, we concluded that there was sufficient evidence to Management calculated that an impairment was required at 31 May support the treatment and disclosure adopted. 2019, which was then reassessed at 30 November 2019. The assessment in November involved calculating the Fair Value less Cost Group – Fair value less cost to dispose impairment test as at 30 to Dispose (“FVLCD”), based on the consideration paid by Marcelos. November 2019 The Directors concluded that there was no further impairment. • We audited management’s estimate of Fair Value less Cost to Dispose, prepared as at 30 November 2019 using the proceeds of the post year end transaction and an estimate of the fair value of debt assumed.

22 concluded thatamountshavebeencorrectlyincludedintheperiod. remain heldinaccountsreceivableasat30November2019and recognised withinrevenuefortheyearto30November2019which contract termsandprices.Managementassessedtheamounts end. Thevalueofaccruedrevenuedependsuponanunderstanding of customer contracts,revenuenotyetinvoicedisaccruedattheyear Given thebillingcycle,differingrevenuestreamsandcertain note 30. revenue by£1.3mfortheyearto30November2018,assetoutin point intime.Appropriateadjustmentshavebeenmadetodecrease determination wasmadewhetherrevenueisearnedovertime,orata to reassessrevenuefromcontractswithcustomers.Primarily, a Following theimplementationofIFRS15managementwasrequired differing pointsofrevenuerecognition. The Grouphasmultiplerevenuestreamsacrossitssubsidiarieswith receivable) Refer tonote30(PriorYear Restatements)andnote16(Accounts Revenue recognition the needforashareholdervoteandotheruncertainties. that thebusinesswasnot“heldforsale“at30November2019,dueto recoverable valueoftheinvestmentthatwassoldpostyearend,but investment insubsidiarybalance)wasrequiredtoreflectthe off underthetermsoftransactionanda£20mimpairment £99m impairmentofintercompanydebtorsthatrequiredtobewritten The Boarddeterminedthatanimpairmentof£119m(compriseda transaction. results fortheyearended30November2019toreflectDBAY Board consideredwhetheranyadjustmentswererequiredtothe The Companyhelditsinvestmentinthetradingentitiesatcost. Company –Investmentinsubsidiaries £3.2m relatingtocontractualarrangementswithsuppliers. were writtenoffinfull,togetherwiththerecognitionoffurthercosts previously capitalised holding onthebalancesheet.Amountsof£4.2m planning toolanddeterminedthatitnolongersatisfiedthecriteriafor Board assessedtheplansofGWSA’smanagementforanewlogistics In respectofotherintangibles,specificallysoftwaredevelopment,the Group -OtherIntangibles Key auditmatter accordance withIFRS15and theevidencethatweobtained Based ontheabove,wefoundthatrevenuewasrecognisedin • • • • • • • We performedthefollowingprocedures: support thetreatmentanddisclosureadopted. Based ontheabove,weconcludedthattherewassufficientevidenceto • Company –Investmentinsubsidiaries support thetreatmentanddisclosureadopted. Based ontheabove,weconcludedthattherewassufficientevidenceto • • Specifically forotherintangibleassets,weperformedthefollowing: Group -Otherintangibles support thetreatmentanddisclosureadopted. Based ontheabove,weconcludedthattherewassufficientevidenceto • • How ourauditaddressedthekeymatter

W W W W with recognitionofrevenue. the accountingpoliciesandkeyareasofjudgementinconnection W invoiced andpaid; accrued attheperiodendandconfirmedthatitwassubsequently management torecordtheamountsdueandwesampledrevenue F that revenuehasbeenrecognisedinthecorrectperiod. source documentationshowingthetimeofdelivery, inorderto ensure W existence material revenuestreamstobankstatementsdemonstrate W ensure compliancewithIFRS15. W contracts; timing ofrevenuerecognitionwereconsistentwiththeunderlying revenue streamstoensurethatmanagement’sconclusionsonthe W IFRS 15onrevenuerecognitionpracticesfortheGroup; W value oftheinvestmentinCompany. confirmed thatthecalculationwascorrectlyappliedtocarrying immediately aftertheAIMsuspensionofshareswaslifted.We whichisbasedonsharepricedata Company’s investmentinGWSA, W other intangibleassets. management’s plansatthattime;and write offshouldhavebeenmadeinapriorperiod,byassessing calculation. We alsoconsideredwhethertherewasevidencethatthe internal costsbyunderstandingtheexpectedusecaseandbenefit assets underdevelopment,particularlyinconnectionwithcapitalised compared to30November2019. CGUs andthecomparisonofimpairmentcalculatedat31May2019 or accruedrevenue,weunderstoodtheprocessadoptedby e consideredtheadequacyofGroup’sdisclosureinrespect e selectedasampleofinvoicesissued,whichwecheckedto e testedafurthersampleofrecognisedrevenueacrossallthe e reperformed,onasamplebasis,thecalculationsrequiredto e examinedasampleoforiginalcontractsacrossallthematerial e evaluatedmanagement’sassessmentoftheimpactadopting e auditedmanagement’scalculationofrecoverablevalueforthe e evaluatedtheapproachadoptedbymanagementincapitalising e challengedmanagementoverthecarryingvaluesofintangible e consideredtheextentofdisclosuresmade. e reperformedtheallocationofFair Value lessCosttoDispose Annual Report and Accounts 2019 Accounts and Report Annual 23

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Independent auditors’ report to the members of Eddie Stobart Logistics plc continued

Key audit matter How our audit addressed the key audit matter Presentation and disclosure of prior period adjustments

Refer to note 30 (Prior Year Restatements) We performed the following procedures:

Management reassessed the reasonableness of a number of key • We reviewed the policies used by management and discussed accounting policies and critical accounting judgements during FY 19 alternatives that would be more aligned with Accounting Standards. (including the treatment of property income, accounting for leased • We assessed management’s response and choices and determined properties and the investment in Speedy) and concluded that these that the revised accounting policies were appropriate in the were not supportable. circumstances. • We examined the key accounting policies and critical accounting A revised approach was adopted and where the new approach judgments to check the completeness of management’s resulted in a material impact to the primary statements an adjustment assessment. has been made to the FY18 comparatives and opening balances accordingly. The total impact of the prior period adjustments was • We audited the underlying documentation for the prior period £49.8m on net assets as at 30 November 2017 and £85.1m on net adjustments to check compliance with the revised approach adopted assets as at 30 November 2018; and the impact on the result for the by management. Underlying documentation included, reading year ended 30 November 2018 was £37.8m. property leases, arrangements for property services, motor insurance arrangements, customer contracts and supplier invoices. • We reperformed management’s calculations of the adjustments. • We checked whether the adjustments were correctly classified as relating to the prior year by reference to the underlying documentation; and • We evaluated the adequacy of the disclosures made in connection with these prior period adjustments. Based on the above, we found that the completeness of the adjustments is supported by the evidence obtained, and that the disclosure provided sufficient explanation of the adjustments made.

The impact of the Covid 19 pandemic

Refer to note 29 (Subsequent events). We performed the following procedures:

Similar to most businesses, Covid 19 has had • We obtained management information outlining the expected impact an overall adverse impact on the business, with that impact varying and understood management’s response to Covid 19. across the components of the business. • We assessed whether the nature and extent of the disclosure made by management was sufficiently complete to articulate the impact of The guidance issued by the FRC on the impact of Covid 19 is that it the pandemic on the business and was supported by the information should be considered a non-adjusting post balance sheet event for available. entities with year ends ending on or after 31 December 2019. As a Based on the above, we determined that management has correctly consequence, the impact of Covid 19 on the business did not need to assessed that the impact of Covid 19 is a non-adjusting post balance be reflected in the financial statements as at 30 November 2019 and sheet event and that the disclosures made are supported by the for the year then ended. information and evidence available.

Management have, however, made a number of disclosures over the impact of Covid 19 and incorporated its impact into their going concern considerations, as noted above.

We determined that there were no key audit matters applicable to the Company to communicate in our report other than relating to the carrying value of the investment in subsidiaries balance as discussed above.

24 How wetailoredtheauditscope continue asagoingconcern. However, because notallfutureeventsorconditionscanbepredicted,thisstatementisaguaranteeastotheGroup’sandCompany’sability • • We havenothingtoreportinrespectofthefollowingmattersrelationwhichISAs(UK)requireusyouwhere: Conclusions relatingtogoingconcern qualitative reasons. £75,000) and£100,000(Companyaudit)(2018:aswellmisstatementsbelowthoseamountsthat,inourview, warrantedreportingfor We agreedwiththeAuditCommitteethatwewouldreport tothemmisstatementsidentifiedduringourauditabove£100,000(Groupaudit)(2018: allocated acrosscomponentswasbetween£570,000and£4,035,000. For eachcomponentinthescopeofourGroupaudit,weallocatedamaterialitythatislessthanoverallmateriality. Therangeofmateriality Based onourprofessionaljudgement,wedeterminedmaterialityforthefinancialstatementsasawholefollows: statements asawhole. financial statementlineitemsanddisclosuresinevaluatingtheeffectofmisstatements,bothindividuallyaggregateon qualitative considerations,helpedustodeterminethescopeofourauditandnature,timingextentproceduresonindividual The scopeofourauditwasinfluencedbyapplicationmateriality. We setcertainquantitativethresholdsformateriality. These,togetherwith Materiality accounting standardsintheyearandimpairmentreviews,wereperformedcentrally. conferences. Specificauditproceduresovercentralfunctions,suchastax,andareasofsignificantjudgment,theadoptionnew regular contactwiththecomponentauditorsduringplanning,executionandcompletionstagesofauditviatelephonecallsvideo Where workwasperformedbycomponentauditors,detailedinstructionswereissuedus.AllteamsareUK-based andwemaintained performed auditprocedurescovered94%ofgrouprevenueand97%thegroup’slossbeforetax. specified proceduresoveramaterialcashbalanceinoneotherentityandauditedtheconsolidationadjustments.Thecomponentswherewe entities withinthegroupwhichholdmaterialbalancessuchasgroup’sdebtfacilitiesandinvestmentinSpeedyFreight. Finally, weperformed We identifiedfouradditionalcomponentswherefullscopeauditswereperformed;beingiForce andTheLogisticsPeople andtwonon-trading We identifiedtwofinanciallysignificantcomponents,beingEddieStobartLimitedandThePallet Network,wherefullscopeauditswereperformed. taking intoaccountthestructureofGroupandCompany, theaccountingprocessesandcontrols,industryinwhichtheyoperate. We tailoredthescopeofouraudittoensurethatweperformedenoughworkbeablegiveanopiniononfinancialstatementsasawhole, Rationale forbenchmarkapplied How wedeterminedit Overall materiality

when the financial statements date are the authorised from for issue months twelve least at of aperiod for accounting of basis concern going the to adopt to continue ability Company’s and Group’s t t he directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the the about doubt significant cast may that uncertainties material identified any statements financial the in disclosed not have directors he or appropriate; not is statements financial the of preparation the in accounting of basis concern going the of use directors’ he Group financialstatements benchmark. stable measureandasanappropriate loss, totalrevenuesisconsideredasamore during theyear2019resultinginasignificant the prioryearauditandsequenceofevents Based ongreaterlevelofunderstandingfrom 0.5% oftotalrevenue. £4.25 million(2018:£1.5million).

Company financialstatements accepted auditingbenchmark. entity asaholdingcompanyandisgenerally measure toassesstheperformanceof We believethattotalassetsisanappropriate 2% oftotalassets. £1.5 million(2018:£225,000). Annual Report and Accounts 2019 Accounts and Report Annual 25

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Independent auditors’ report to the members of Eddie Stobart Logistics plc continued

Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions and matters as described below.

Strategic Report and Directors’ Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year ended 30 November 2019 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

26 • 4 July2020 Manchester Chartered AccountantsandStatutoryAuditors for andonbehalfofPricewaterhouseCoopersLLP Pauline Campbell(SeniorStatutoryAuditor) W • • • Under theCompaniesAct2006wearerequiredtoreportyouif, inouropinion: Companies Act2006exceptionreporting Other requiredreporting

e havenoexceptionstoreportarisingfromthisresponsibility. not visitedbyus;or the Companyfinancialstatementsarenotinagreementwithaccountingrecordsandreturns. certain disclosuresofdirectors’remunerationspecifiedbylawarenotmade;or adequate accountingrecordshavenotbeenkeptbytheCompany we havenotreceivedalltheinformationandexplanationsrequireforouraudit;or , or returns adequate for our audit have not been received from branches , orreturnsadequateforouraudithavenotbeenreceivedfrombranches Annual Report and Accounts 2019 Accounts and Report Annual 27

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Consolidated Income Statement for the year ended 30 November 2019

Year ended Year ended 30 November 30 November 2019 2018 Note £’000 £’000 Continuing operations Revenue 3 857,526 781,462 Cost of sales (712,263) (642,975) Gross profit 145,263 138,487

Administrative expenses: before amortisation of acquired intangibles and exceptional items (158,340) (131,338) Movement in credit gain/(loss) on contractual assets 16 692 (2,978) Amortisation of intangibles 6, 13 (15,442) (13,158) Administrative expenses: before exceptional items (173,090) (147,474) Administrative expenses: exceptional items 5 (200,171) (5,112) Total administrative expenses (373,261) (152,586)

Loss from operating activities (227,998) (14,099) Loss from operating activities: before exceptional items 4 (27,827) (8,987)

Finance income 8 9 12 Finance expenses: before exceptional items 8 (9,519) (6,101) Finance expenses: exceptional items 5 (1,679) (489) Total finance expense (11,198) (6,590) Net finance expense (11,189) (6,578) Share of profit from equity accounted investees, net of tax 14 1,022 1,339 Equity accounted investees: exceptional items 5 (772) (2,917) Loss before tax 6 (238,937) (22,255) Loss tax expense 9 7,715 714

Loss for the year from continuing operations (231,222) (21,541) Earnings per share Basic – total operations 11 (61.0p) (5.9p) Diluted – total operations 11 (61.0p) (5.9p)

The accompanying notes form part of the financial statements.

28 The accompanyingnotesformpartofthefinancialstatements. Total comprehensivelossfortheyear Total OtherComprehensiveincome/(loss)fortheyear Foreign currencytranslationdifferences-equityaccountedinvestees Foreign currencytranslationdifferences-foreignoperations Items thatareormaybereclassifiedsubsequentlytoprofitloss: Loss fortheyear Consolidated Statement ofComprehensive Income for theyearended30November2019 Note 14 Annual Report and Accounts 2019 Accounts and Report Annual

30 November (231,546) (231,222) Year ended (324) (256) £’000 2019 (68) 30 November Year ended (20,975) (21,541) £’000 566 655 2018 (89) 29

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Consolidated Statement of Changes in Equity for the year ended 30 November 2019

Share Share Share Merger Translation options Own Retained Total capital premium reserve reserve reserves shares earnings equity £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Balance at 30 November 2017 3,579 117,257 7,950 (487) 1,079 (2,700) 85,710 212,388 Prior year adjustments ------(49,803) (49,803) Restated balance at 30 November 2017 3,579 117,257 7,950 (487) 1,079 (2,700) 35,907 162,585 Restated loss for year ended 30 November 2018 (1) ------(21,541) (21,541) Total other comprehensive income - - - 566 - - - 566 Issue of capital (net of costs) (note 23) 214 28,745 - - - - - 28,959 Share based payment charges - - - - 1,679 - - 1,679 Dividends paid ------(21,572) (21,572) Restated balance at 30 November 2018 3,793 146,002 7,950 79 2,758 (2,700) (7,206) 150,676 Loss for year ended 30 November 2019 ------(231,222) (231,222) Total other comprehensive loss - - - (324) - - - (324) Share based payment charges - - - - 1,460 - - 1,460 Dividends paid ------(18,057) (18,057) Balance at 30 November 2019 3,793 146,002 7,950 (245) 4,218 (2,700) (256,485) (97,467)

(1) The above table has been restated for prior year adjustments in the comparative period as follows:

Reported Total prior year Restated 30 November 2018 adjustments 30 November 2018 £’000 £’000 £’000

Profit for year ended 30 November 2018 16,245 (37,786) (21,541)

Foreign currency movement (2,507) 2,507 -

Balance at 30 November 2018 13,738 (35,279) (21,541)

30 Retained earnings Total equity Company number08922456 Director Christopher Casey behalf by: The ConsolidatedGroupFinancialStatementsonpages28to79were approvedbytheBoardofDirectorson4July2020andweresignedits Share optionreserve Own shares Translation reserve Merger reserve Share premium Share capital Equity Net assets Total liabilities Deferred taxliabilities Trade andotherpayables Loans andborrowings Non currentliabilities Trade andotherpayables Loans andborrowings Current liabilities Liabilities Total assets Cash andcashequivalents Current taxrecoverable Trade andotherreceivables Inventories Current assets Deferred taxasset Investments inequityaccountedinvestees Intangible assets Goodwill Property, plantandequipment Non-current assets Assets Provisions Provisions Consolidated Statement ofFinancialPosition as at30November2019 Note 23 23 23 23 23 23 23 22 19 20 21 21 18 20 17 16 15 22 14 13 13 12

30 November 30 November (256,485) (492,778) (242,331) (140,211) (250,447) (153,976) 146,002 395,311 197,536 174,697 197,775 (97,467) (97,467) (14,342) (73,849) (13,929) (12,818) (83,653) 11,078 13,761 88,482 25,420 62,676 (2,700) 4,218 7,950 3,793 9,345 2,416 7,436 (245) £’000 2019 Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November 4143 (316,593) (431,453) 2709 (172,953) (217,049) 1899 (113,666) (128,989) (143,640) (214,404) 1089 (127,674) (160,839) 5,7 162,585 150,676 4,0 117,257 146,002 5,7 162,585 150,676 8,2 479,178 582,129 152,531 214,704 9,0 141,128 194,806 6,2 326,647 367,425 1,1 90,235 117,713 7,8 155,207 172,584 1,0)(16,421) (35,318) (11,006) (68,612) 4,1)(7,096) (44,817) 42311,777 14,203 59760,371 65,907 726 35,907 (7,206) 270 (2,700) (2,700) 842 (7,548) (8,442) 878 (8,870) (8,748) Restated ,5 1,079 2,758 ,5 7,950 7,950 ,9 3,579 3,793 ,6 (2,770) 2,569 ,4 12,270 3,142 ,2 2,396 3,126 ,7 8,564 8,079 £’000 2018 9(487) 79 30 November 30 November Restated £’000 2017 31

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Consolidated Cash Flow Statement for the year ended 30 November 2019

Restated year Year ended 30 ended November 30 November 2019 2018 Note £’000 £’000 Cash flows from operating activities Profit for the year from continuing operations (231,222) (21,541) Adjustments for: Tax credit 9 (7,715) (714) Share of profit of equity-accounted investees, net of tax 14 (1,022) (1,339) Net finance costs 8 11,189 6,578 Exceptional items (excluding finance expenses) 5 200,943 8,029 Amortisation of intangible assets 6,13 15,442 13,158 Depreciation 6,12 9,946 7,743 Tangible and intangible fixed asset write offs - 875 Loss/(gain) on sale of property, plant and equipment 1,846 (2,779) Equity settled share-based payment expenses 1,460 2,004 Foreign exchange (355) 695 Changes in: Inventories 710 (730) Trade and other receivables (1,128) (72,542) Trade and other payables (277) 55,429 Provisions and employee benefits - 464 Cash outflow from operating activities 4 (183) (4,670) Cash outflow from exceptional items 4 (12,292) (8,499) Net interest paid (8,780) (7,120) Property related activity inflow - treated as lease incen-tives 21,340 19,790 Income taxes paid (8,114) (3,400) Net cash outflow from operating activities (8,029) (3,899) Cash flows from investing activities Proceeds from sales of property, plant and equipment 3,412 3,570 Acquisition of subsidiaries, net of cash acquired - (22,127) Acquisition of associates - (1,967) Purchase of property, plant and equipment (16,788) (14,155) Purchase of intangibles (2,890) (3,313) Interest received - 15 Dividends received from equity accounted investees 14 1,597 1,735 Net cash used in investing activities (14,669) (36,242) Cash flows from financing activities Proceeds from issue of share capital (net of costs) - 28,960 (Repayment) / drawdown of invoice discounting facility 40,159 38,510 Draw down of new borrowings (net of costs) (300) 23,355 Repayment of financing facility (net of costs) - (21,530) Payment of capital element of finance lease liabilities (3,877) (5,077) Prior year and interim dividends paid during the year 10 (18,057) (21,572) Net cash generated from financing activities 17,925 42,646 Net (decrease)/increase in cash and cash equivalents (4,773) 2,505 Cash and cash equivalents at the start of the financial year 14,203 11,777 Effect of exchange rate fluctuations on cash held (85) (79) Cash and cash equivalents at the end of the financial year 9,345 14,203

32 Having consideredalltheabove,DirectorscontinuetoadoptgoingconcernbasisinpreparingFinancialStatements. meet itsobligationsastheyfalldueforatleast12monthsfromthedateofapprovalthesefinancialstatements. Marcelos Limitedhassufficientfundingtomeetthisobligation.TheDirectorsbelievethattheavailableisenable Companyto Limited hasagreedtoprovideenabletheCompanysettleitsexpensesandliabilitiesastheyfalldue.TheDirectorshaveseenevidence that Greenwhitestar AcquisitionsLimited(GWSA)andgeneratesnotradingincomeinitsownright.TheCompanyisreliantonloanfundingthat Marcelos The Directorshaveconsideredgoingconcernonthebasisofposttransactionstructure.Companyindirectlyholdsa49%interest in • • • The completionofthetransactionincludedextensionexistingbankingfacilitiesandanadditionalinvoicediscountingfacilityasfollows: financing intoGreenwhitestarandthetradingentitiesofGroupbywayapayment-in-kind facility(the“PIKFacility”). 3 subsidiary oftheCompanyandinturnheldCompany’sintereststradingentitiesGroup.DBAY hasinjectedapproximately£50m 51% stakeinGreenwhitestarAcquisitionsLimited(“Greenwhitestar”),whichuntilimmediatelypriortocompletionofthetransactionwasawholly-owned On 9December2019DouglasBayCapitalIIIFund LP, afundmanagedbyDBAY AdvisorsLimited(“DBAY”), has,throughMarcelosLimited,acquireda Going concern consistently byGroupentitiesunlessotherwisestated. the exceptionofnewaccountingstandardsappliedforfirsttimeinperiod,assetoutnote30.Accountingpolicieshavebeen The GroupandCompanyaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallyearsintheseConsolidatedFinancialStatements,with Basis ofpreparation reporting underIFRS. Interpretation Committee(‘IFRSIC’)interpretationsendorsedbytheEUandwiththosepartsofCompaniesAct2006applicabletocompanies The ConsolidatedFinancialStatementshavebeenpreparedinaccordancewithInternationalReportingStandards(IFRS)andtheIFRS Statement ofcompliance value addedlogistics,distributionandwarehousingservicesforitsclientsacrossawiderangeofservicesectorsindustries. subsidiaries (referredtoasthe‘Group’)andGroup’sinterestinassociatesjointlycontrolledentities.TheGroupitsprovide year ended30November2019andtherestatedcomparative2018comprisefinancialstatementsofCompanyits shares arepubliclytradedontheAIMmarketofLondonStockExchange.TheConsolidatedFinancialStatementsCompanyasatandfor Company’s registeredofficeisStrettonGreenDistributionPark, LangfordWay, Appleton,Warrington, Cheshire,England,WA4 4TQ. TheCompany’s Eddie StobartLogisticsplc(theCompany)isacompanylimitedbysharecapital,incorporatedanddomiciledintheUnitedKingdom.Theaddressof 1. PrincipalAccountingPolicies £50m netof£5mretained inMarcelosLimitedrelatingtotransaction costs.

which isdueforrepaymenton9December2025. The provisionofanincremental£20mrevolvingcreditfacilitywhichhasbeenmadeavailableatthesametimeas£50mPIKnotewas issued, The ongoingprovisionofthe£100minvoicediscountfacilityuntil22November2024;and August 2021; The ongoingprovisionofthe£124mtermloanwhichhasbeenextendedtoNovember2024andsubjectrepayment£35minstages by Notes tothe Consolidated FinancialStatements for theyearended30November2019 Annual Report and Accounts 2019 Accounts and Report Annual 3 of new ofnew 33

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

1. Principal Accounting Policies continued Basis of measurement The Consolidated Financial Statements have been prepared on the historical cost basis, except derivative financial instruments which are measured at fair value.

The Directors have considered the fair values of all debtors and creditors and have determined that their fair values equate to their carrying values.

Basis of consolidation The Consolidated Financial Statements comprise the financial statements of the Group and its subsidiaries as at 30 November 2019. Control is identified when the Group has rights to variable returns from its involvement with the investee and has the ability to affect those returns from its power over the investee. The Group controls an investee where: • Power over the investee exists (the ability to direct the relevant activities of the investee). • Exposure or rights to variable returns via its involvement with the investee exists. • The Group has the ability to use its power over the investee to affect those returns • he ongoing provision of the £124m term loan which has been extended to November 2024 and subject to repayment of £35m in stages by August 2021;

There is a general presumption that majority voting rights results in control, however where the Group has less than a majority of voting rights, or similar rights, the Group considers all relevant fact and circumstances in assessing whether it has control over an investee including: • Contractual arrangements with the other vote holders of the investee • Rights arising from the other contractual arrangements • he Group’s voting rights and potential voting rights

The Group reassess whether or not it controls the investee if facts and circumstances indicate that there are changes to elements of control. Consolidation arises when the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Assets, liabilities, income, expenses and cash flows of a subsidiary which has been acquired or disposed of during the year are included in the Consolidated Financial Statements from the date the Group gains control and until the date the Group ceased control of the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group. When necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The Financial Statements of subsidiaries used in the preparation of the Consolidated Financial Statements are prepared for the same reporting year as the Parent Company, except for the iForce Group, which operates a 53 week reporting period ending 1 December 2019. A change in the ownership interest of a subsidiary without loss of control is accounted for as an equity transaction. Any investment retained is recognised at fair value.

i. Business combinations - business combinations are accounted for using the acquisition method as at the acquisition date (when control is transferred to the Group). The Group measures goodwill at the acquisition date as: • the fair value of the consideration transferred; plus • the recognised amount of any non-controlling interests in the acquiree; plus • if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less • the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

ii. Non-controlling interests - for each business combination, the Group measures any non-controlling interest in the acquiree at its proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.

iii. Subsidiaries - subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases.

34 i. Financial instruments ii. oreign currencytransactions-inforeigncurrenciesaretranslatedtotherespectivefunctionalofGroupentitiesat i. Foreign currency and otherdepartmentswhicharenotdirectlyallocatedtobusinessunits,aswelldriverrelatedservicesincludingTheLogisticP transport andvehicletransportationinEurope.Otherrepresentsheadofficecosts,interestcostscentralsuchasHR,IT ChampionshipTM andTruckstops). iForce groupandThePallet Networkgroupareconsideredtobesinglesegments.EUTransport represents and warehouseservicesintheUKIreland,Ports andSpecial Operations(consistingofworkrelatingtotheFIAFormula 1World operations viadistinctfunctionsaswellasector-based view. GeneralTransport representsroadtransportandassociatedcontractlogistics During theperiod,GroupprovidedcontractlogisticsservicesinUKandEurope.Inyearto30November2019managed its Group’s chiefoperatingdecisionmaker, toassessperformanceandallocatecapitalorresources. Operating segmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtoCompany’sBoardofDirectors,collectively the Segment reporting vi. v. iv. 1.

Principal AccountingP the samewayasunrealisedgains,butonlytoextentthatthereisnoevidenceofimpairment. accounted investeesareeliminatedagainsttheinvestmenttoextentofGroup’sinterestininvestee.Unrealisedlosses in with equity are eliminatedinpreparingthe Consolidated FinancialStatements.Unrealisedgainsarisingfromtransactions transactions, intra-group loss ondisposal. control islost,thecumulativeamountintranslationreserverelatedtothatforeignoperationreclassifiedprofitorlossaspartof gainor currency translationreserve(translationreserve)inequity. Whenaforeignoperationisdisposedofsuchthatcontrol,significantinfluenceorjoint rates atthedatesoftransactions.Foreign currencydifferencesarerecognisedinothercomprehensiveincome,andpresentedtheforeign adjustments arisingonacquisitionaretranslatedatthehistoricrate.Theincomeandexpensesofforeignoperationsexchange of itsshort less fromtheacquisitiondatethataresubjecttoaninsignificantrisk ofchangesintheirfairvalue,andareusedbytheGroupmanagement comprise tradeandotherreceivables.Cashcashequivalents cashbalancesandcalldepositswithmaturitiesofthreemonthsor loans andreceivablesaremeasuredatamortisedcostusingtheeffective interestmethod,lessanyimpairmentlosses.Loansandreceivables active market.Suchassetsarerecognisedinitiallyatfairvalueplusany directlyattributabletransactioncosts.Subsequenttoinitialrecognition, Non-derivative financialassets-loansandreceivables,including assetswithfixedordeterminablepaymentsthatarenotquotedinan F exchange rateattheendofyear. beginning oftheyear, adjustedfor effectiveinterestandpaymentsduringtheyear, andtheamortisedcostinforeigncurrencytranslatedat retranslated attheexchangeratethatdate.Theforeigncurrencygainorlossonmonetaryitemsisdifferencebetweenamortised cost atthe exchange ratesatthedatesoftransactions.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesreportingdateare F T obligation orhasmadepaymentsonbehalfoftheinvestee. interests thatformpartthereof, isreducedtozero,andtherecognition offurtherlossesisdiscontinuedexcepttotheextentthatGrouphasan the Group’sshareoflossesexceedsitsinterestinanequity-accounted investee,thecarryingamountofinvestment,includinganylong-term investees fromthedatethatsignificantinfluenceorjointcontrolcommencesuntilceases.When The ConsolidatedFinancialStatem the investmentincludestransactioncosts. Investments inassociatesandjointly-controlled entitiesare accounted forundertheequitymethodandarerecognisedinitiallyatcost.Thecostof Group hasjointcontrol,establishedbycontractualagreementandrequiringunanimousconsentforstrategicfinancialoperatingdecisions. Group holdsbetween20%and50%ofthevotingpoweranotherentity. Jointly-controlled entitiesarethoseoverwhoseactivitiesthe significant influence,butnotcontrolorjointcontrol,overthefinancialandoperatingpolicies.Significantinfluenceispresumedtoexistwhen Investments inassociatesandjointly Statement ofComprehensiveIncome. interests andtheothercomponentsofequityrelatedtosubsidiary. Anysurplusordeficitarisingonthelossofcontrolisrecognisedin Loss ofcontrolasubsidiary-onlosscontrol,theGroupderecognisesassetsandliabilities ransactions eliminatedonconsolidation-intra-groupbalancesandtransactions,anyunrealisedincomeexpensesarisingfrom oreign operations-theassetsandliabilitiesofforeignoperations,aretranslatedatexchangeratesreportingdate.Goodwillfair value -term commitments. olicies continued ents include the Group’s share of the profitorlossandothercomprehensiveincomeofequity-accountedents includetheGroup’sshareof -controlled entities(equity-accounted investees)-associatesarethoseentitiesinwhichtheGrouphas Annual Report and Accounts 2019 Accounts and Report Annual , anynon-controlling , Finance,Payroll eople. 35

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

1. Principal Accounting Policies continued ii. Non-derivative financial liabilities - financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs.

Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Financial liabilities comprise loans and borrowings, debt securities issued, bank overdrafts, and trade and other payables.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the statement of cash flows.

iii. Share capital - ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

iv. Derivative financial instruments and hedging – the Group uses interest rate swap derivative financial instruments to hedge its risks associated with interest rate fluctuations. All derivative financial instruments are initially recognised and subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken to the consolidated income statement.

Property, plant and equipment Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use including any directly attributable capitalised borrowing costs and an estimate of any future costs of dismantling and removing the items and restoring the site on which they are located.

Items of property, plant and equipment are depreciated from the date they are available for use or, in respect of self-constructed assets, from the date that the asset is completed and ready for use. Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line basis over their estimated useful lives.

Depreciation is generally recognised within administrative expenses in profit or loss, unless the amount is included in the carrying amount of another asset. Assets held under finance lease are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.

The estimated useful lives for significant items of property, plant and equipment are as follows: • Land and buildings: 20 to 100 years straight line, or period of lease if shorter • Plant and machinery: 3-7 years straight line and between 15%-20% reducing balance as appropriate • Fixtures fittings and equipment: 3-7 years straight line and between 15%-33% reducing balance as appropriate • Commercial vehicles: 3-10 years straight line and 25% reducing balance as appropriate

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Assets under construction Assets under construction at operating depots are capitalised as assets-under-construction. The cost of assets-under-construction comprises its purchase price and any costs directly attributable to bringing it into working condition for its intended use. Assets-under-construction are not depreciated. Once the asset is complete and available for use, depreciation is commenced.

Intangible assets and goodwill These comprise software development and implementation costs (internally generated intangible assets), trademarks and brands and are stated at cost less accumulated amortisation and impairment (see below). Costs incurred in developing the Group’s own brands are expensed as incurred and are included within admin expenses.

Separately acquired brands and customer lists are shown at historical cost. Software, brands and customer lists acquired in a business combination are recognised at fair value at the acquisition date.

These assets are deemed to have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful lives.

Goodwill that arises on the acquisition of subsidiaries is presented within intangible assets. The measurement of goodwill at initial recognition is explained in the basis of consolidation policy set out above. Subsequently, goodwill is measured at cost less accumulated impairment losses.

36 recognised. amount doesnotexceedthecarryingthatwouldhavebeen determined,netofdepreciationoramortisation,ifnoimpairmentlosshadbeen An impairmentlossinrespectofgoodwillisnotreversed.For otherassets,animpairmentlossisreversedonlytotheextentthatasset’scarrying carrying amountofanygoodwillallocatedtotheCGU, andthentoreducethecarryingamounts oftheotherassetsinCGUonaproratabasis. Impairment lossesarerecognisedintheincomestatement. lossesrecognisedinrespectofCGUsareallocatedfirsttoreducethe expected tobenefitfromthesynergiesofcombination. which goodwillismonitoredforinternalreportingpurposes.Goodwill acquiredinabusinesscombinationisallocatedtogroupsofCGUsthatare CGUs towhichgoodwillhasbeenallocatedareaggregatedsothat the levelatwhichimpairmenttestingisperformedreflectslowest ii. i. Impairment Amortisation methods,usefullivesandresidualvaluesarereviewedateachreportingdateadjustedifappropriate. • • These areasfollows: Amortisation ischargedtotheincomestatementonastraight-line basisovertheestimatedusefullifeofasset. are availableforuse. Except forgoodwill,intangibleassetsareamortisedonastraight-line basisinprofitorlossovertheirestimatedusefullives,fromthedatethatthey Computer softwaredevelopmentcostsrecognisedasassetsareamortisedovertheestimatedusefullives. Intangible assets-under Development costspreviouslyrecognisedasanexpensearenotassetinasubsequentperiod. Other developmentexpendituresthatdonotmeetthesecriteriaarerecognisedasanexpenseincurred. • • • • • • recognised asintangibleassetswhenthefollowingcriteriaaremet: Development coststhataredirectlyattributabletothedesignandtestingofidentifiableuniquesoftwareproductscontrolledbyGroup Costs associatedwithmaintainingcomputersoftwareprogrammesarerecognisedasanexpenseincurred. are amortisedovertheestimatedusefullives. Acquired computersoftwarelicencesarecapitalisedonthebasisofcostsincurredtoacquireandbringusespecificsoftware.These 1.

Principal AccountingP independent ofthecashinflowsotherassetsorCGUs. impairment testing,assetsaregroupedtogetherintothesmallestgroup ofassetsthatgeneratescashinflowsfromcontinuingusearelargely using apre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevaluemoneyandrisksspecifictoassetorCGU. For of itsvalueinuseandfairlesscoststosell.Inassessinguse,theestimatedfuturecashflowsarediscountedtheirpresent carrying amountofanassetorcash-generatingunit(CGU)exceedsitsrecoverableamount.TheCGUisthegreater estimated. Goodwillistestedannuallyforimpairmentorearlierifthereareindicatorspresent.Anlossrecognisedthe reporting datetodeterminewhetherthereisanyindicationofimpairment.Ifsuchexists,thentheasset’srecoverableamount Non-financial assets-thecarryingamountsofGroup’snon-financialassets,otherthaninventoriesanddeferredtax the probabilityofdefaultusinghistoricinformationandalsoconsideringimpactanyrelevantforward-lookinginformation. permitted byIFRS9.ThedeterminationofexpectedcreditlossesrequiresjudgmentandtheGrouphasdevelopedamethodologyforestimating impairment asrequiredbyIFRS9.TheGroupappliesthismodeltoitstradereceivablesandaccruedincome,usingthesimplifiedapproach as Non-derivative financialassets-aassetnotclassifiedasfairvaluethroughprofitorloss,issubjecttotheexpectedcreditlossmodel for Rights totrademarks,brandnamesandcustomerrelationshiplists;615years Software developmentandlicences;3years the expenditureattributabletosoftwareproductduringitsdevelopmentcanbereliablymeasured. adequate technical,financialandotherresourcestocompletethedevelopmentuseorsellsoftwareproductareavailable; it canbedemonstratedhowthesoftwareproductwillgenerateprobablefutureeconomicbenefits; there isanabilitytouseorsellthesoftwareproduct; management intendstocompletethesoftwareproductanduseorsellit; it istechnicallyfeasibletocompletethesoftwareproductsothatwillbeavailableforuse; -construction comprisesofpurchasepriceanddevelopmentcostsinbringinganassettoauseableorsellablecondition. olicies continued Annual Report and Accounts 2019 Accounts and Report Annual , are reviewed at each , arereviewedateach 37

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

1. Principal Accounting Policies continued Financial assets The Group classifies its financial assets at amortised cost only if both of the following criteria are met: • the asset is held within a business model whose objective is to collect the contractual cash flows; and • the contractual terms give rise to cash flows that are solely payments of principal and interest.

All of the Group’s financial assets are held at amortised cost with the exception of derivatives, which are held at fair value through profit and loss.

Trade receivables Trade and other receivables are stated at their fair value on initial recognition and subsequently at amortised cost, i.e. fair value less any expected credit losses.

The Group applies the simplified approach permitted by IFRS 9 to trade receivables, which requires the use of the lifetime expected loss provision for all receivables, including contract assets (accrued income). The provision calculations are based on historic credit losses and relevant forward- looking data. This approach is followed for all receivables unless there are specific circumstances, such as the bankruptcy of a customer or emerging market risks, which would render the receivable irrecoverable and therefore require a specific provision.

The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under this arrangement, the Group has transferred the relevant receivables to the factor in exchange for cash and is prevented from selling or pledging the receivables. However, the Group has retained late payment and credit risk. The Group therefore continues to recognise the transferred assets in their entirety in its balance sheet. The amount repayable under the factoring agreement is presented as secured borrowing. The Group considers that the ‘held to collect’ business model remains appropriate for these receivables, and hence it continues measuring them at amortised cost.

Cash and cash equivalents Cash and cash equivalents are defined as cash in hand, demand deposits, and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. No expected credit loss provision is held against cash and cash equivalents as the expected credit loss is negligible.

Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the average cost principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make the sale.

Employee benefits i. Short-term employee benefits - short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

ii. Defined contribution plans - a defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in the periods during which related services are rendered by employees.

Share-based payments The Group operates a number of equity-settled, share-based compensation plans, under which the Group receives services from employees as consideration for equity instruments (options) of the Group. The fair value is measured by an independent third party to review and calculate fair values using the Log-normal Monte-Carlo stochastic model and Black Scholes Option pricing model. The fair values of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted: • including any market performance condition (for example, an entity’s share price); • excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and • including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

38 included asdeferredincome. advance ofamountsbeinginvoicedthisisincludedasaccruedincome. Whereamountsarebilledinadvanceofrevenuebeingrecognisedthisis value ofmoneyasitdoesnotexpecttohaveanycontractswhichincludeasignificantfinancingarrangement.Whererevenueisrecognised in consume theservicesprovidedorcontrolispassedtocustomerforgoodsprovided.TheGroupdoesnotadjustitstransactionprice forthetime performance obligationsunderthesecontractsaresatisfied.Revenueisrecognisedovertimeasthecustomerwillsimultaneouslyreceive and The Group’scontractsarefortheprovisionoftransportandwarehousingservicesGrouprecognisesrevenuefromas the comparatives. The GrouphasappliedIFRS15RevenuefromContractswithCustomersandadoptedthefullyretrospectivemethodrestatement of Revenue iv iii. ii. i. provisions are: money andtherisksspecifictoliability. The unwindingofanydiscountisrecognisedasafinancecost.Thepoliciesusedtodeterminespecific cash flows.Whenithasamaterialeffect,thesearediscountedatpre-taxdiscountratethatreflectscurrentmarketassessmentsofthe timevalueof it isprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbasedonexpected future A provisionisrecognisedif, asaresultofpastevent,theGrouphaspresentlegalorconstructiveobligationthatcanbe estimatedreliably, and Provisions settlement oftheliabilityforatleast12monthsafterbalancesheetdate. borrowings usingtheeffectiveinterestmethod.BorrowingsareclassifiedascurrentliabilitiesunlessGrouphasanunconditionalrighttodefer difference betweentheproceeds(netoftransactioncosts)andredemptionvalueisrecognisedinincomestatementoverperiod Borrowings arerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.subsequentlystatedamortisedcost;any Borrowings Trade payablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredamortisedcostusingtheeffectiveinterestmethod. Trade payables in whichthedividendsareapprovedbyCompany’sshareholders. Dividend distributiontotheCompany’sshareholdersisrecognisedasaliabilityinGroup’sConsolidatedFinancialStatementsperiod Dividend distribution charge willbetreatedasacashsettledtransaction. The socialsecuritycontributionspayableinconnectionwiththegrantofshareoptionsisconsideredanintegralpartitself the proceedsreceivednetofanydirectlyattributabletransactioncostsarecreditedtosharecapitalnominalvalueandpremium. When theoptionsareexercised,Companyeitherissuesnewshares,orusesownsharespurchasedforthispurpose.For issuednewshares, 1.

.

Principal AccountingP Employee claims-aprovisionforemployeeisrecognisedonanindividualbasisbasedtheadviceofGroup’sexternaladvisers. recognises anyimpairmentlossontheassetsassociatedwiththatcontract. expected costofterminatingthecontractandnetcontinuingwithcontract.Beforeaprovisionisestablished, Group lower thantheunavoidablecostofmeetingitsobligationsundercontract.Theprovisionismeasuredatpresentvalue ofthe Onerous contracts-aprovisionforonerousisrecognisedwhentheexpectedbenefitstobederivedbyGroupfromcontract are premiums. TheexpectedcostsofclaimsisbasedontheadviceGroup’sexternalinsuranceadvisers. Motor Insurance–aprovisionisrecognisedbasedontheexpectedcostsofclaimsrelatedtomotoraccidentsthatarenotcoveredbyinsurance Guidance forthetotalcostismadewithreferencetoindependentthirdpartyquantitysurveyorsreportsandspreadovertermsof lease. Dilapidations -provisionsareestablishedoverthelifeofleasestocoverremedialworknecessaryatterminationundertermsthose leases. olicies continued Annual Report and Accounts 2019 Accounts and Report Annual , andthe

39

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

1. Principal Accounting Policies continued Customer contracts are disaggregated into their component performance obligations. Further detail is given in the table below:

Area Explanation Operating segment Revenue recognition Open book revenue Open book contracts will typically General Transport Revenue relating to costs to serve the customer are invoiced in cover costs plus an agreed fixed line with the customer receiving and consuming benefits under the or variable management fee. EU contract, and is recognised in the period in which it is earned. Performance obligations are measured against minimum service level agreements. Closed book revenue Revenue for closed book General Transport Revenue based on a pre-agreed rate-card is recognised as contracts is recognised based on services are provided, in line with the customer receiving and a pre-agreed rate-card per unit/ EU consuming benefits under the contract. delivery iForce

TPN

Membership fees Membership fees (fixed) TPN Membership fees are recognised over the term of the contract. Performance-related Revenue linked to performance General Transport Variable revenue is recognised to the extent the performance revenue measures, such as Key obligation has been satisfied and it is highly probable a significant Performance Indicators (KPIs) revenue reversal will not occur. and gain-share mechanisms. Carrier management Licensing of carrier management iForce Revenue related to licensing of carrier management software and software and provision of carrier provision of services is recognised over the term of the contract. management services Sale of goods Sale of goods to final consumers General Transport Revenue on sale of goods is recognised at the point in time the customer receives control of the goods.

Government grants Government grants received on capital expenditure are generally deducted in arriving at the carrying amount of the asset purchased. Grants for revenue are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant, and are then recognised in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses incurred are recognised in the profit or loss as other income on a systematic basis in the periods in which the expenses are recognised.

Leases i. Leased assets - assets held by the Group under leases which transfer substantially all of the risks and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised in the Group’s Consolidated Statement of Financial Position.

ii. Lease payments - payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Where leases contain escalation clauses that stipulate specific increases to the rental payable, the operating lease expense is recorded on a straight-line basis. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rental income Rental income is recognised on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

Finance income and finance costs Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings and unwinding of the discount on provisions. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.

40 No otherstandardswhichareinissue butnotyeteffectiveareexpectedtohaveamaterialimpacton the Group. IFRS 16Leases Title not beenappliedtothesefinancialstatements,wereinissue,butyeteffective: At thedateofapprovaltheseConsolidatedFinancialStatements,followingstandardsandinterpretations,relevanttoGroup,which have retrospective methodandthereforethecomparativeperiodshavebeenrestated. the financialyearbeginningon1December2018.Seenote30forfulldetailsofimplementationanditseffects.TheGrouphaveapplied thefully The GrouphaveimplementedIFRS9FinancialInstrumentsand15Revenuefromcontractswithcustomers,botheffectiveforthefirst timefor New standardsandinterpretations ii. i. business combination,oritemsrecogniseddirectlyinequityothercomprehensiveincome. Tax expensecomprisescurrentanddeferredtax.Currenttaxarerecognisedinprofitorlossexcepttotheextentthatitrelates toa x Ta IFRS measures. view couldinfluencetheunderstandingofperformanceandcomparabilityyearonyear. Note4providesareconciliationbetweenAPMsandstatutory Underlying resultsareusedintheday-to-day managementoftheGroup.TheyrepresentstatutorymeasuresadjustedforitemswhichinDirectors Alternative performancemeasures(APMs) of unamortisedbankfeeshavebeentreatedasexceptionalcosts(seenote5). associated exitandassetimpairmentcosts,intangiblecontractrestructuringcoststhe In thecurrentyearitemsrelatedtoimpairmentcharge,costsassociatedwithsaletransaction,deferredconsideration,onerousleaseand with businessacquisitions,andothersignificantgainsorlosses. to theclassificationofitemsasexceptionalincluderestructuringbusinessunitsandassociatedlegalemployeecosts,costs may giverise Events which performance. business underlying the Group’s about information helpful provides exceptional items recording of separate Items thatarematerialinsizeornaturepresentedasexceptionalitemstheincomestatement.TheDirectorsofopinion Exceptional items 1.

Principal AccountingP • • • purposes andtheamountsusedfortaxationpurposes.Deferredtaxisnotrecognisedfor: Deferred tax-isrecognisedinrespectoftemporarydifferencesbetweenthecarryingamountsassetsandliabilitiesforfinancialreporting from thedeclarationofdividends. at thereportingdate,andanyadjustmenttotaxpayableinrespectofpreviousyears.Currentalsoincludesliabilityarising Current tax-istheexpectedpayableorreceivableontaxableincomelossforyear

taxable temporarydifferencesarisingontheinitialrecognitionofgoodwill. control thetimingofreversaltemporarydifferencesanditisprobablethattheywillnotreverseinforeseeablefuture; temporary differencesrelatedtoinvestmentsinsubsidiaries,associatesandjointlycontrolledentitiestheextentthatGroupisable to accounting nortaxableprofitorloss; temporary differencesontheinitialrecognitionofassetsorliabilitiesinatransactionthatisnotbusinesscombinationandaffects neither sets outasingleleaseaccountingmodel. of leasesasoperatingorfinanceand November 2020.IFRS16eliminatestheclassification is effectivefortheGroupyearended30 IFRS 16wasissuedbytheIASBinJanuary2016and Key Issues olicies continued Effective Date endorsement. subsequent toEU or after1January2019, Periods beginningon , usingtaxratesenactedorsubstantively presented afterinterestandtax. be equityaccountedand the EddieStobartbusinesswill majority oftheyearresults November 2020asforthe on disposalfortheyearended30 sheet, incomestatementorprofit impact oneitherthebalance expected tobeasignificant 9 December2019thereisnot controlling shareintheGroupon Logistics plcdisposedofits 2019 howeverasEddieStobart by theGroupon1December The transitionwillberecognised Impact onEddieStobartLogisticsplc Annual Report and Accounts 2019 Accounts and Report Annual 41

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

2. Summary of Significant Accounting Judgements and Fair Value estimates Significant accounting judgements In the application of the Group’s accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group’s accounting policies In the process of applying the Groups accounting policies, which are described above, the Directors have made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below) and have been identified as being particularly complex or involve subjective assessments.

i. Impact of DBAY transaction – the directors have considered whether the sale of the controlling share of the Eddie Stobart business to DBAY on 9 December 2019 should result in the balance sheet and results of the trading subsidiaries being presented as discontinued operations in line with IFRS 5. For the disposal group to be classified as held for sale and presented as discontinued operations the sale must be highly probable. The sale of the Eddie Stobart business was dependent upon the shareholder vote which occurred on 6 December 2019 and given there was limited evidence of shareholder voting intention as at 30 November 2019 the sale could not be deemed highly probable and therefore the transaction does not meet the IFRS 5 recognition criteria at 30 November 2019.

ii. Determination of Alternative Performance Measures (note 4) - alternative performance measures, such as underlying results, are used in the day-to-day management of the Group, and represent statutory measures adjusted for items which, in the Directors’ view, could influence the understanding of comparability and performance of the Group year on year. These items include amortisation of acquired intangibles, share of profit from equity accounted investees, employee share scheme costs which were fully funded by the previous parent holding Group, exceptional costs, and in the prior year, start-up costs associated with contract wins and the profit impact of severe weather conditions.

iii. Assessment of Agent versus Principal in considering whether to recognise revenue gross or net – judgement is required when determining whether an entity is acting as an agent or principal based on an evaluation of the risks and responsibilities taken by the entity. In the case of The Pallet Network Limited, the operating model has a number of mixed indicators. It is the view of management that the key determining factors such as the responsibility for the delivery of services and the provision of insurance, lead to the conclusion that the business acts as a Principal and therefore the revenue should be recognised gross for this entity.

iv. Assessment of control – for non-wholly owned acquisitions judgement is required in evaluating the facts and circumstances in order to assess and determine whether and when the Group has control. In making this determination, Directors look closely at whether the Group has the ability to influence the returns generated by the investee through being able to direct its activity, whether the investee is exposed to variable rates of return and shareholder voting patterns.

Key sources of estimation in applying the Group’s accounting policies The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities of the Eddie Stobart business within the next financial year have been noted below. The Eddie Stobart business will be equity accounted for from 9 December 2019.

i. Impairment - the Group is required to perform an annual impairment test on the carrying value of each of its CGU’s assets, or if there are indicators of impairment present by reference to its recoverable amount, being the higher of value in use or its fair value, less costs of disposal. This requires an estimate of future business performance, cash flows and discount rates all of which rely on estimates and judgements of future events and may therefore be subject to change. The future business performance is sensitive to forecasted revenue, staff and overhead costs as well as assumptions made in improved efficiency and profitability. Whilst the Group is able to manage the majority of costs the revenue projections are inherently short term in nature and can be affected by factors outside of the business’s control in the medium to long term such as market conditions and consumer trends. At 31 May 2019 a total impairment of £169.2m was recognised by referencing to the value in use of each CGU compared to the carrying value of assets. Reasonably possible sensitivities were applied to these forecasts such as a reduction in forecasted revenue and delays to any efficiency improvements included within the forecasts which by their nature are subjective and may have a material impact on the impairment recognised. At the 30 November 2019 a further impairment test has been performed on a fair value less cost to sell basis with reference to the DBAY transaction that completed the 9 December 2019. No further impairment has been recognised.

ii. Dilapidations – the Group has a significant warehouse portfolio. In assessing the potential liability at the end of each lease the Group commissioned a third party qualified surveyor report and sought advice from other property specialists who have extensive industry and portfolio knowledge. Such an estimate is in its nature subjective due to the variations between the different sites, the future use of the building and overall level of dilapidations required at the end of the lease which could have a material impact on the provision. The provision held as at 30 November 2019 is £14.4m. In estimating this provision, management has made the judgment that certain sites will be subject to redevelopment by the landlord, which reduces the dilapidation obligation. In addition, management have made judgments around how potential lease extensions may impact dilapidation obligations. Four sites are impacted by these particular judgments and, if the outcome is different to the judgment made, this could (decrease)/increase the provision by c£(1.6)m/£7.3m. It is also possible that the dilapidation liabilities may be settled, in negotiation, for less than the amount provided. Management will continue to assess its estimate in line with experience.

42 5 4 General Transport Underlying EBITDA Margin Other Divisions EU Transport TPN iForce General Transport Underlying EBITDA Other Divisions EU Transport TPN iForce General Transport Revenues Segmental Analysis ofoperatingsegments ChampionshipTM andTruckstops). iForce group and warehouseservicesintheUKIreland,Ports andSpecialOperations(consistingofworkrelatingtotheFIAFormula 1World operations viadistinctfunctionsaswellasector-based view. GeneralTransport representsroadtransportandassociatedcontractlogistics During theperiod,GroupprovidedcontractlogisticsservicesinUKandEurope.Inyearto30November2019managedits 3. OperatingSegments iii. 2. SummaryofSignificantAccountingJudgementsandFair Value estimatescontinued All operationsarecontinuingforeachsegment. since theinterimresultsandchangesarereflectedbelow. separately. Comparativeinformationhasbeenrestatedaccordingly, revenueandcostallocationoftheOtherDivisionssectorhasbeenreassessed iForce andTPN)arenowtreatedasingleoperatingsegment,GeneralTransport. iForce groupandThePallet Networkgrouparepresented segments. Thishasresultedinachangepresentationforthefinancialstatementsasroadtransportandcontractlogisticsservices(excluding assets andliabilitiesthewaybusinessoperatesinpracticeitwasconcludedthatGeneralTransport isamoreappropriatereflectionofthe offering toourcustomersaspartofthecontinuedstrategytowardsdeliveringafullendsupplychaincapability. Giventheinabilitytosplit for incomestatementitemsonly. Assetsandliabilitieswerenotsplit,couldbereliablysplit.Theoperatingsegmentisconsideredasasingle performance andallocatesresources.ThechiefoperatingdecisionmakerpreviouslyreceivedinformationthatsplitstheGeneralT The Grouphasreassessedthepresentationofitsoperatingsegments,basedonwayinwhichchiefdecisionmakerboth evaluates and otherdepartmentswhicharenotdirectlyallocatedtobusinessunits,aswelldriverrelatedservicesincludingTheLogisticP transport andvehicletransportationinEurope.Otherrepresentsheadofficecosts,interestcostscentralsuchasHR,IT Other Divisions EU Transport TPN iForce The TPNgroupmeans ThePallet NetworkGroupLimitedanditssubsidiaries The Pallet NetworkLimited andEezehaulLimited The iForce groupmeansiForce GroupLimitedanditssubsidiaries,Buyforce Limited,iForce Limited,iForce Holdings AuctionsLimited,iForce LimitedandiForce Trading Limited

a materialreleaseoftheprovisionorimpairmentbasedontiminganysale/surrenderassets/leasesrecoverablevalue. based ontheGroupsintentiontosurrenderleasesaswellanestimatedrecoverablevalueofassetswithintheseproperties.Therecouldbe of £5.0mhasbeenrecognised.Thisinvolvesanestimatetheexpectedrunningcostsbuildingsandalsoleaseexitdate assets of impairment an and £1.4m of provision a and November 2019 30 at as therefore onerous are requirements and operational to surplus are also identifiedanonerousleaseprovisioninrelationtopropertyleases.OnreviewofitsleasestheGrouphasanumberthat confirmed itisassumedthatallleaseswillruntotheendofterm,earliestwhichJuly2022,latestNovember2025.TheGrouphas and anysalegain/lossthatcouldoccurupondisposaloftheassetspriortoendleaseterm.Unlessanearlyterminationdateis break clause,unless,anearlyterminationdateisknownandconfirmed.Thisinvolvesestimateoftheresidualvaluesassetsonlease in anonerousleaseprovisionof£1.5mandimpairmentassets£0.4m,basedontheremainingtermasthereisnocontractual Onerous leases–theGrouphasid entified an onerous lease relating to a number of specialist vehicles as at 30 November 2019. This has resulted a numberofspecialistvehiclesasat30November2019.Thishasresulted entified anonerousleaserelatingto 4 andThePallet Networkgroup 5 areconsideredtobesinglesegments.EUTransport represents 30 November2019 857,526 Year ended 135,646 618,639 20,470 (8,971) (5,465) 82,771 (0.9)% 16.6% 3,393 6,920 4,166 0.0% 5.1% 5.0% Annual Report and Accounts 2019 Accounts and Report Annual £’000 n/a 43 - , Finance,Payroll ransport segments eople. Restated year ended Restated yearended 30 November2018 781,462 602,671 40,981 16,764 10,050 58,713 78,903 (6,435) 3,348 3,978 5,823 7.4% 2.1% 8.2% 6.8% 7.4% £’000 194 n/a 43

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

3. Operating Segments continued The revenue from one customer amounted to more than 10% of the Group’s total revenue. The revenue from that customer was £157.3m for the year ended 30 November 2019 (2018: £174.2m) and this was reported in the General Transport Operating Segment.

For Board reporting purposes the balance sheet is not disaggregated or produced segmentally for the chief operating decision maker, a reconciliation of segment underlying EBITDA to reported profit from operating activities before exceptional items is detailed in note 4. Within the General Transport operational segment all revenue relates to the transport services other than £124.5m (2018 £112.6m) related to warehousing services.

Year ended Restated year ended 30 November 2019 30 November 2018 By Geographical Segment £’000 £’000

United Kingdom 837,056 740,481 EU 20,470 40,981 857,526 781,462

The Group also presents and reviews revenues organised by customer sector.

Analysis of revenue by sector

Year ended Restated year ended 30 November 30 November 2019 2018 Sector £’000 £’000 Revenues Retail 243,365 237,586 Consumer 236,545 179,732 E-commerce 187,684 169,528 Manufacturing, Industrial & Bulk (MIB) 169,064 189,262 Non sector specific 20,868 5,354 857,526 781,462

4. Alternative Performance Measures Reconciliations Alternative performance measures (APMs) Alternative performance measures (APMs), such as underlying results, are used in the day-to-day management of the Group, and represent statutory measures adjusted for items which, in the Directors’ view, could influence the understanding of comparability and performance of the Group year on year. These items include amortisation of acquired intangibles, share of profit from equity accounted investees, employee share scheme costs which were fully funded by the previous parent holding group, exceptional costs, start-up costs associated with contract wins and the profit impact of severe weather conditions.

44 Cash impactofexceptionalitems Non-cash exceptionalitems Other non-cashexceptionalitems Impairment ofbankfees Deferred considerationassociatedwithbusinessacquisitions Remuneration relatedtotheacquisitionofanassoci-ate Onerous leaseprovision Impairment charge Software impairmentandassociatedexitcosts Asset impairmentanddilapidationsprovisions Costs incurredrelatedtoDBAY disposal Adjusted for: Exceptional items(note5) Cash impactofexceptionalitems Adjusted freecashflow Income taxespaid Proceeds fromsaleofproperty, plantandequipment ofproperty,Purchase plantandequipment Cash generatedfromoperatingactivities Adjusted (loss)/profitafterbefore(note11) Underlying EBIT Start-up costsassociatedwithcontractwins Income taxcredit Adjusted (loss)/profitaftertax(note11) Exceptional items Start upcostsassociatedwithcontractwins Force majeure-severeweather Management IncentivePlanandLong-Term IncentivePlan Force majeure-severeweather Management IncentivePlanandLong-Term IncentivePlan Employee shareschemecostsfundedbypreviousparentholdinggroup Share ofprofitfromequityaccountedinvestees Amortisation ofacquiredintangibles Reported lossfromoperatingactivitiesbeforeexceptionalitems Reconciliation tounderlyingEBITDA 4. AlternativePerformance MeasuresReconciliationscontinued 6 Employee shareschemecostsfundedbypreviousparentholdinggroup Amortisation ofacquiredintangibles Loss aftertaxattributabletoownersofthecompany Underlying EBITDA Depreciation Underlying EBIT and Underlying EBITDA from equity accounted investees. arestated before taxbut include the after tax share ofprofit 6 6 Annual Report and Accounts 2019 Accounts and Report Annual 30 November (202,622) (231,222) Year ended 190,330 169,206 202,622 (12,292) (21,673) (16,788) (19,413) (11,698) (27,827) 15,442 15,442 (8,114) (7,715) (9,903) 1,679 1,877 6,692 6,444 3,257 3,412 1,022 9,946 (183) £’000 403 772 743 743 717 717 2019 43 - - - - - 30 November year ended (18,655) (14,155) (21,541) 13,158 13,158 16,764 Restated Restated (8,499) (8,518) (3,400) (4,670) (8,987) 3,570 2,932 1,387 8,518 3,646 1,387 1,111 1,111 1,339 7,743 9,021 (714) £’000 445 445 568 568 2018 19 19 ------45

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

5. Exceptional Items

Restated year Year ended ended 30 November 30 November 2019 2018 £’000 £’000 Exceptional items included in administrative expenses Deferred consideration associated with business acquisitions (4,331) (2,767) Restructuring costs (550) (475) Costs associated with business acquisitions - (1,870) Specialist vehicle onerous lease provision (3,063) - Costs incurred relating to the DBAY disposal (9,162) - Impairment charge (169,206) - Property asset impairment and onerous lease provision (6,444) - Software impairment and associated exit costs (7,415) - Total exceptional items included in administrative expenses (200,171) (5,112) Exit of lending arrangements of The Pallet Network Group - (489) Impairment of bank fees (1,679) - Total exceptional items included in finance expenses (1,679) (489) Remuneration related to the acquisition of an associate (772) (2,917) Total exceptional items included in equity accounted investees (772) (2,917)

Total exceptional items before tax (202,622) (8,518)

Deferred consideration associated with business acquisitions relates to contingent consideration which is dependent on continued service and is therefore accounted for as remuneration relating to the acquisitions The Logistic People at £nil (2018: £0.8m) and The Pallet Network Group at £4.3m (2018: £2.0m).

Restructuring costs relate to the exit of the previous CEO Alex Laffey who left the business on 23 August 2019 and the cost of his 12 month notice period has been charged to the income statement.

Onerous lease provision of £3.1m has arisen due to an impairment of and onerous lease on specialist assets following the exit from an underperforming contract in the year.

Costs incurred relating to the DBAY disposal represent those costs incurred by the Group from the initial review of options by the Board to the acceptance and conclusion of the DBAY transaction. The £9.2m includes legal, due diligence and other transaction related costs.

The Group recognised an impairment charge of £169.2m across two CGU’s (General Transport £150.0m and iForce £19.2m) in the six months to 31 May 2019 following a value in use impairment analysis. No additional impairment has been recognised as at 30 November 2019. See note 13.

Asset impairment and onerous lease costs of £6.4m relates to the assets within three properties where the net book value of assets held at 30 November 2019 is higher than the expected recoverable value at the exit of the property and the property lease is surplus to operational requirements and it is the Groups intention to surrender the lease.

Software impairment and exit costs relates to an ongoing software development project that due to the uncertainty and changes to the business has been put on hold. The financial benefits of the project will need to be reviewed after the pandemic and as a result the project no longer meets the recognition criteria for an intangible asset and therefore an impairment has been recognised for the full asset value along with a provision recognised for the expected costs of exiting the project.

Remuneration related to the acquisition of an associate relates to deferred consideration accounted for as remuneration as it is dependent on continued service relating to the acquisition of 47.5% of the share capital of Puro Ventures trading as Speedy Freight at £0.8m (2018: £2.9m).

Impairment of bank fees relates to unamortised fees at 30 November 2019 which due to the refinancing on 9 December 2019 have been released in full.

46 (Gain) /lossfromforeignexchangearisingintheyear - commercialvehicles - plantandequipment - landandbuildings Operating leaserentalspayable: Fees payabletotheCompany'sauditorsforreviewofParent CompanyandtheConsolidatedInterimStatements Government grants Loss/(gain) ondisposalofproperty, plantandequipment Amortisation ofintangibleassets(note13) Depreciation ofproperty, plantandequipment(note12) Tax, sharebasedpaymentadviceandotherservicespayabletotheCompany’spreviousauditors Non-Audit Services Fees payabletotheCompany'spreviousauditorsforauditofSubsidiaries 8 7 Fees payabletotheCompany'sauditorsforauditofParent CompanyandtheConsolidatedFinancialStatements Audit services detailed below: During theyear, theGroup(includingoverseassubsidiaries)obtainedfollowingservicesfromGroup’s auditors,thecostsofwhichare Auditors’ remuneration Employee benefits(note7) The followingitemshavebeencharged/(credited)inarrivingatprofitbeforeincometax: 6. ProfitBeforeTax Fees payabletotheCompany'sauditorsforauditofSubsidiariescurrentandprioryearoverrun Fees £nil) relatingtotheoverruncostsoffinalisation oftheprioryearsubsidiaryauditswas£0.8m (2018: The interimreviewwas notperformedbytheCompany’sauditorsin theprioryear 8 7

Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November 215,599 Year ended Year ended 54,150 15,442 34,899 9,019 1,846 9,946 1,233 1,556 (355) £’000 £’000 553 657 2019 2019 - - 30 November 30 November 30 November 30 November 204,439 year ended year ended 40,241 43,871 13,158 (2,779) Restated Restated Restated Restated 4,815 7,743 157 £’000 £’000 695 553 347 2018 2018 92 44 - 47

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

7. Employees and Directors Details concerning the remuneration of Directors are highlighted in the table, referenced as audited, on page 16 of the Directors’ Remuneration Report. Staff costs and the average number of persons (including Directors) employed by the Group during the year

Restated Year ended year ended 30 November 30 November 2019 2018 £’000 £’000 Staff costs for the Group during the year Wages and salaries, including payments on termination 192,364 181,854 Social security 17,899 18,451 Pension 5,336 4,134 215,599 204,439 Average monthly number of employees Total operational 4,358 4,133 Total administration 2,051 1,851 Total management 82 94 Total employees 6,491 6,078

Pensions - Defined contribution scheme The Group operates a defined contribution retirement benefit plan for all qualifying employees. The assets of the plan are held separately from those of the Group under the control of trustees. The only obligation of the Group with respect to the retirement benefit plan is to make specified contributions. Share based payments Costs relating to the SIP, MIP and LTIP totalled £1.5m in the year (2018: £1.7m). Further details are provided in note 24.

Directors’ Remuneration A summary of Directors’ remuneration is detailed below; Year ended Year ended 30 November 30 November 2019 2018 £’000 £’000 Emoluments, bonus and benefits in kind 1,547 970 Pension costs 22 65 Total Directors’ remuneration 1,569 1,035

Key management compensation (including Executive Directors): Restated Year ended year ended 30 November 30 November 2019 2018 £’000 £’000 Emoluments, bonus and benefits in kind 3,131 2,486 Pension costs 96 172 Total management compensation 3,227 2,658

48 Total Financeexpense Total creditintheincomestatement Total deferredincometaxcredit Total Financeexpense:exceptionalitems Effect ofratechangeonopeningbalance Adjustments inrespectofpriorperiods Current taxyear Deferred taxation(credit)/charge Exit oflendingarrangementsThePallet NetworkGroup Impairment ofbankfees Finance expense:exceptionalitems Total financeexpense Total currentincometaxcharge Interest payableonfinanceleases Interest payableonloannotes Adjustments inrespectofpriorperiods Amortisation ofbankfees Interest rateswaps:interestcharged Overseas corporationtax Interest rateswaps:fairvaluethroughP&L Interest payableonbankloansandoverdrafts Finance expense UK Corporationtax Current incometax Total taxcharged/(credited)intheIncomeStatementrespectofcontinuingoperations 9. Tax expense/(credit) Bank interestreceivable Finance income 8. FinanceIncomeandExpense Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November Year ended Year ended (11,189) (7,715) (7,295) (1,679) (8,659) (1,679) (9,519) (1,584) (7,400) 1,364 1,164 (420) (368) (694) (123) (934) £’000 £’000 2019 2019

9 - - - - 30 November 30 November year ended year ended Restated Restated (6,578) (1,619) (1,670) (6,101) (5,182) (714) (489) (489) (587) (574) (163) £’000 £’000 905 571 399 497 2018 2018 (21) (91) (66) 72 12

- 49

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

9. Tax expense/(credit) continued

Restated Year ended year ended 30 November 30 November 2019 2018 £’000 £’000 Loss before tax on continuing operations (238,937) (22,255) Loss before tax on continuing and discontinued operations multi-plied by the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%) (45,398) (4,228) Effects of: Post-tax profits of Associates (194) (271) Expenses / (income) not deductible for tax purposes including prof-it on disposal 1,248 697 Expenses not deductible – exceptional items 3,365 1,404 Effect of different tax rates on overseas profits 493 562 Impact of change in rate 1,018 144 Non-deductible intangibles 28,645 706 Deferred tax not recognised from prior year 3,320 905 Adjustments in respect of prior periods (212) (633) Total tax credit – continuing operations (7,715) (714)

A reduction in the UK corporation tax rate from 20% to 19% became effective from 1 April 2017. The rate applied for the year ended 30 November 2019 was 19% (2018: 19%). Following a review of the expected maturity profile of the deferred tax liability a rate of 17% has been applied at 30 November 2019 (2018: 17%).

Factors that may affect future tax expenses The Group has not recognised deferred tax assets in respect of losses and loan relationships with a tax value of £7.5m (2018: £3.1m) in the UK and therefore, to the extent that these losses may be used against profits arising in future periods, the effective tax rate on these profits may be reduced. Other than certain items noted in the tax reconciliation above, there are no other significant factors that may affect future tax expenses. See note 22.

10. Dividends At the date of approving these Financial Statements, no final dividend has been approved or recommended by the Directors (2018: recommended dividend 4.76p per share).

A final dividend of £18.1m for the 2018 financial year was approved by the shareholders on 28 May 2019 and paid during the year on 7 June 2019 to shareholders on the register at 10 May 2019.

Restated Year ended year ended 30 November 30 November 2019 2018 £’000 £’000

Final dividend for the year ended 30 November 2018 of 4.76p per share (2018: 4.4p) 18,057 15,735 Interim dividend for the year ended 30 November 2019 of Nil p per share (2018: 1.5p) - 5,837

50 Net effectofshareoptionsinissue Weighted averagenumberofOrdinaryShares-Diluted Weighted averagenumberofordinaryshares–Diluted Diluted earningspersharefortotaloperations Diluted Net effectofsharesissuedandpurchasedduringtheyear Basic earningspersharefortotaloperations performance oftheGroup: including relatedtaxandexceptionalitemswhereapplicable,sincetheDirectorsconsiderthatthisprovidesfurtherinformationon underlying An alternativeearningspersharemeasureissetoutbelow, beingearnings,beforeamortisationof acquiredintangiblesandexceptionalitems 9 Adjusted profitaftertax(Note4) Basic Adjusted earningspershare Issued ordinarysharesatthebeginningofyear Weighted averagenumberofordinaryshares–Basic Loss attributedtoequityshareholders weighted averagenumberofordinarysharesthatwouldbeissuedonconversionallthepotentiallydilutiveinstrumentsintoshares. attributable toordinaryequityholdersoftheCompanybyweightedaveragenumbersharesoutstandingduringyearplus weighted averagenumberofordinarysharesoutstandingduringtheyear. Dilutedearningsper shareamountsarecalculatedbydividingtheprofit Basic earningspershareamountsarecalculatedbydividingprofitfortheyearattributabletoordinaryequityholdersofCompany 11. EarningsPer Share The share options in issue have not been considered as these shares have an anti-dilutive effect due totheGroupbeingloss making The shareoptionsinissue havenotbeenconsideredastheseshares haveananti-dilutiveeffectdue 9 9 9 Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November (231,222) Year ended Year ended 379,347 379,347 379,347 381,824 (11,698) (61.0p) (61.0p) 2,477 (3.1p) (3.1p) '000 £’000 £'000 2019 2019 - 30 November 30 November year ended year ended 366,959 366,959 357,918 369,999 (21,541) Restated Restated 9,041 3,646 3,040 (5.9p) (5.9p) 1.0p 1.0p £’000 £’000 '000 £'000 2018 2018 51

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

12. Property, Plant and Equipment

Fixtures, Land and Plant and fittings and Commercial Assets under buildings machinery equipment vehicles construction Total £’000 £’000 £’000 £’000 £’000 £’000 Restated cost at 30 November 2017 32,935 8,179 9,546 20,137 1,453 72,250 Assets purchased on business acquisition 2,164 804 2,797 738 - 6,503 Effects of movements in foreign exchange 145 33 24 73 - 275 Additions in the year 6,409 1,589 2,002 2,225 5,253 17,478 Additions transferred from assets under construction 5,249 97 - - (5,346) - Disposals (764) (61) (286) (6,605) (553) (8,269) Reclass adjustments (268) 134 (11) (602) - (747) Restated cost at 30 November 2018 45,870 10,775 14,072 15,966 807 87,490 Effects of movements in foreign exchange (301) (64) (56) (171) - (592) Additions in the year 7,357 1,954 3,121 13,509 3,359 29,300 Transfers between asset categories (83) 7 76 - - - Transfers to intangible assets - - - - (492) (492) Impairment (651) - (1,493) - - (2,144) Disposals (642) (1,132) (420) (7,761) (140) (10,095) Cost at 30 November 2019 51,550 11,540 15,300 21,543 3,534 103,467

Restated accumulated depreciation at 30 November 2017 1,465 2,292 3,067 5,055 - 11,879 Assets purchased on business acquisition 566 661 2,468 302 - 3,997 Effects of movements in foreign exchange 84 26 21 69 - 200 Charge for the year 2,379 1,250 1,655 2,459 - 7,743 Disposals 53 (44) (189) (2,065) - (2,245) Reclass adjustments 4 19 (19) 5 - 9

Restated accumulated depreciation at 30 November 2018 4,551 4,204 7,003 5,825 - 21,583 Effects of movements in foreign exchange (185) (58) (50) (156) - (449) Charge for the year 2,337 2,126 2,125 3,358 - 9,946 Disposals (326) (849) (280) (4,418) - (5,873) Transfers between asset categories (9) (34) 35 8 - - Impairment (note 5) 12,148 1,689 208 1,539 - 15,584 Accumulated Depreciation at 30 November 2019 18,516 7,078 9,041 6,156 - 40,791

Net book value at 30 November 2019 33,034 4,462 6,259 15,387 3,534 62,676 Restated net book value at 30 November 2018 41,319 6,571 7,069 10,141 807 65,907

As at 30 November 2019, the balances held in respect of assets held under finance leases and hire purchase agreements are:

Cost - 1,966 1,036 21,540 - 24,542 Aggregate depreciation - (282) (467) (5,956) - (6,705) Net book value at 30 November 2019 - 1,684 569 15,584 - 17,837

As at 30 November 2018, the balances held in respect of assets held under finance leases and hire purchase agreements are:

Cost 1,687 846 1,121 16,180 - 19,834 Aggregate depreciation (210) (357) (187) (5,435) - (6,189) Net book value at 30 November 2018 1,477 489 934 10,745 - 13,645

The value of land not depreciated is £nil (2018: £nil).

52 13. GoodwillandIntangibleAssets Restated costat30November2017 Intangible Assets Additions /(writedowns)duringtheyear Restated 30November2017 Goodwill At 30November2019 Disposals intheyear Restated costat30November2018 Additions intheyeararisingfromacquisition Additions intheyear Adjustment Impairment Restated 30November2018 Restated amortisationandimpairmentat30November2017 Transfers fromproperty, plantandequip-ment Impairment Additions intheyear Effects ofmovementsinforeignexchange 30 November2019 At 30November2019 Restated amortisationandimpairmentat30November2018 Effects ofmovementsinforeignexchange Amortisation chargefortheyear Net bookvalueat30November2018 Impairment Disposals Amortisation chargefortheyear Effects ofmovementsinforeignexchange Net bookvalueat30November2019 iForce CGUhasbeenimpairedby £19.2m. property, plantandequipmentintangibleassetsinline withtheircarryingvalue,£10.2mand£12mrespectively. Thegoodwillcarriedonthe CGU wereimpairedintotalby£150m, goodwillwasimpairedby£127.8m,withtheremaining£22.2m ofimpairmentbeingallocatedbetween The Grouprecognisedatotalasset impairmentof£169.2macrosstheGeneralTransport andiForce CGUs.TheassetsoftheGeneralTransport impairment recognisedof£169.2m. Due toimpairmentindicatorsbeing presentattheinterimreportingdateforperiodended31May 2019 animpairmenttestwasperformedand strength ofbrandawarenessandthelongevityindustriesinwhich thebusinessisinvolved. inflows fortheGroup.Factors takenintoconsiderationinthisjudgementarethelongperiodoverwhichbusinesshasbeenestablished, Goodwill isconsideredtohaveanindefinitelifebecausethereno foreseeable limittotheperiodoverwhichitisexpectedgeneratenetcash and arebeingamortisedover15years. Customer relationshipsrepresenttheexistingcontractualandexpected futurerelationshipswithcustomersoftheGroupatpointacquisition 15 years,beingtheperiodoflicenceagreement. Brand namescomprisetheEddieStobarttrademarkanddesigns,which havebeenlicensedbytheGroupandarebeingamortisedbetween6 are beingamortisedbetween3and5years. Software comprisesinternallygeneratedsoftwarepackages,developed bytheindividualbusinessunitsinordertosupporttheiroperations.These There werenobusinesscombinationsmadeduringtheyear. 1784 1,2)-(147,045) - (19,221) - (127,824) 2,2 ,0 6331,7 172,584 17,377 26,383 1,000 127,824 2,2 ,0 633-155,207 - 26,383 1,000 127,824 1302,5 2,7 9 165,222 992 129,577 23,353 11,300 167,114 3,531 129,579 23,333 10,671 Transport Software ,2 2309,2 126,552 - 99,425 22,300 4,827 ,6 1894,5 76,740 - 48,950 49,401 21,829 - 5,961 29,431 17,381 2,589 ,8 ,5 0,4 ,3 117,713 3,531 100,148 5,952 8,082 ,3 ,2 0679288,482 992 80,627 1,524 5,339 General General ,5 ,3 7,286 33,276 3,531 - - 30,154 - 1,033 2,089 3,755 ,4 0-1722,890 1,722 - 20 1,148 ,1 ,3 ,3 13,083 - 7,632 3,735 1,716 ,0 6 024-11,920 - 15,442 - 10,254 564 9,265 3,884 1,102 2,293 58 2 58 (1,058) (538) (2) - (518) £’000 £’000 7 3662,9 36,317 - 21,799 13,646 872 2)---(22) - - - (22) 1 (1) - - - (1) 1 (1) - - - (1) 1 - - - 1 ,0 ,6 72825,420 17,258 7,162 1,000 - 73717,377 17,377 - - - 19 (119) (119) - - - 9 492 492 (4,215) (4,215) ------Brand names EU Transport £’000 £’000 relationships Customer iForce £’000 £’000 Annual Report and Accounts 2019 Accounts and Report Annual Assets under Assets under construction £’000 £’000 TPN £’000 £’000 Total Total 53

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

13. Goodwill and Intangible Assets continued The pre-tax discount rates applied to the forecast cash flows for the 31 May 2019 impairment review were, for General Transport and TPN 13.0% (Nov 2018: 10.7%), EU Transport 12% (Nov 2018: 10.7%) and iForce 12% (Nov 2018: 10.7%).

The Group applied reasonably possible contingencies at the 31 May 2019 to its most recent approved budgets and forecasts to determine the recoverable amount of all CGUs and therefore determine the total asset impairment. Where a CGU was not impaired, the reasonably possible contingencies applied did not result in an impairment. These contingencies related to CGU specific revenue and gross margin reduction and a delay in forecast operational improvements and other cost savings, and had a total impact on value in use of £43.9m.

At the 30 November 2019 a further impairment test has been performed on a fair value less cost to sell basis with reference to the DBAY transaction that completed the 9 December 2019. Details of the post balance sheet event are set out in note 29 .Given the consideration of £1, the deemed value to the Eddie Stobart business is the transfer of liabilities which has been measured as the fair value of net debt and long-term liabilities disposed of, this excluded items such as deferred income where cash has already been received.

The deemed value has been allocated to the CGUs (iForce, TPN and EU Transport) based predominantly on the use of recent market transaction multiples of EBITDA and in the knowledge that some subsidiaries had been recently acquired. Value was attributed, as relevant to each subsidiary acquisition, with the balance of the deemed consideration being allocated to the General Transport CGU where no such benchmark exists.

Following this exercise, no further adjustment to impairment was required.

To the extent that the EBITDA multiples and/or forecast EBITDA are more or less than what has been assumed in the impairment calculation which we do not foresee, a further impairment may be possible. The impact of these sensitivities can be seen below:

(Impairment)/Surplus

General iForce TPN EU Transport Transport Segment £’000 £’000 £’000 £’000 Increase of forecast EBITDA by 15% 8,084 18,413 6,381 (15,299) Decrease of forecast EBITDA by 15% (1,691) 2,062 475 16,733 Increase in EBITDA multiples by 1x 8,563 19,185 6,240 (16,409) Decrease in EBITDA multiples by 1x (2,170) 1,290 616 17,843

14. Investments in Equity Accounted Investees

Restated Year ended year ended 30 November 30 November 2019 2018 £’000 £’000 Balance at 30 November 8,079 8,564 Foreign exchange movement (68) (89) Post-tax share of profits 1,022 1,339 Dividends received from equity accounted investees (1,000) (1,735) Loans from equity accounted investees (597) - Closing Balance 7,436 8,079 Represented by Property, plant and equipment 103 100 Goodwill and intangible assets 5,796 5,766 Current assets 5,887 7,096 Current liabilities (4,323) (4,871) Non-current liabilities (27) (12) Share of net assets 7,436 8,079

All joint ventures have a reporting year end of 31 December. The Group has taken advantage of the exemption from producing additional financial statements for those joint ventures whose financial year end is not co-terminus with the Group’s financial year. IAS 27 allows the use of an alternative financial year end date for Joint ventures on the basis that it would be impractical to align the joint venture year end as it is currently aligned to the year end of the other parties participating in the joint venture. Under IAS 27 the Group is required to make adjustment to the financial statements for any significant transactions or events that may arise at the date of signing these statements. No such adjustments are necessary.

During the financial year, the Group received dividends of £1.0m (2018: £1.7m).

The prior year has been restated following the reclassification of Puro Ventures Limited (trading as Speedy Freight) to an associate. See note 30.

54 The ageingoftradereceivablesandaccruedincomewiththeirassociatedprovisionforimpairmentisdetailedbelow: other debtors. Included within‘Otherreceivables,accruedincomeandprepayments’is£28.6mofincome,£7.6mprepayments£16.2m relatingto Other receivables,accruedincomeandprepayments Balances withassociate Trade receivables–net Less expectedcreditlossoftradereceivables Closing Balance Overdue morethan2months Overdue lessthan1month Current The movementintheexpectedcreditlossisasfollows: Movement inaccruedincomehasonlybeenaffectedbynormaltrading fluctuations. Overdue morethan2months Overdue 1-2months Overdue lessthan1month Current Other receivablesandprepayments-accruedincome Trade receivables 16. Trade andOtherReceivables ofthesegoodsduringtheyeararechargeddirectlytoConsolidatedIncomeStatement. inventories. Purchases Inventories representthevalueoffuel,lubricantsandconsumablesuppliesasat30November2019.Thereisnoimpairmentprovisioninrespect Total Consumable supplies Fuel andlubricants 15. Inventories receivables receivables 5,0 276 150,883 (2,726) 153,609 & accured & accured 210-32,180 78,415 - - 28,630 - 32,180 78,415 28,630 income ,4 9,543 2,115 - (2,726) 4,841 9,543 Trade £’000 Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November 174,697 122,253 124,979 credit loss 52,420 Expected Expected (2,726) 2,416 1,983 433 £’000 £’000 2019 2019 £’000 24 30 November 30 November 30 November 194,806 130,827 138,108 63,979 (2,726) (4,118) Restated (7,281) 2,410 3,126 716 £’000 £’000 £’000 700 692 2019 2018 2018 £’000 Total - 55

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

17. Cash and Cash Equivalents

Restated 30 November 30 November 2019 2018 £’000 £’000 Cash at bank and in hand 9,345 14,203

18. Trade and Other Payables (Current) Year ended Restated 30 November 30 November 2019 2018 £’000 £’000 Trade payables 80,846 96,254 Tax and social security 9,810 16,140 Other payables, accruals and deferred income 63,320 48,445 153,976 160,839

Within ‘Other payables, accruals and deferred income’ includes £7.7m of payments received in advance of revenue being recognised and as such has been treated as deferred income. Movement in deferred income is only impacted by normal trading fluctuations. Also included within ‘Other payables, accruals and deferred income’ is £40.1m of accruals, £6.8m other creditors and £8.7m relating to lease incentives.

19. Trade and Other Payables (Non-current) Restated 30 November 30 November 2019 2018 £’000 £’000 Deferred lease liability 12,537 11,616 Deferred income – lease incentives 55,886 53,665 Other financial liability 5,229 3,062 Other long term payables 197 269 73,849 68,612

The other financial liability includes £4.7m of deferred consideration relating to the acquisitions of The Pallet Network Group £2.9m and associate acquisition of Speedy Freight £1.8m. A liability of £0.5m (2018: £0.4m asset) has been recognised in relation to the fair value of the interest rate swap.

Deferred income relates to lease incentives that amortised over the life of their respective leases.

56 Net debt Cash Total loansandborrowings discounting facility, seenote29. The completionofthetransactionwithDBAY on9December2019includedtheextensionofexistingbankingfacilitieswith an additionalinvoice secured againstspecificassetsoftheGroup. of interestrepayableineitherquarterlyormonthlyinstalmentsoveraperiodbetween5-15yearsuntil2021throughto2031.Thefacilities are The GrouphasfinancefacilitiesinBelgiumwhicharesecuredagainstassetsthatregionandcompriseloanstotalling€7.0m,subject to afixedrate until 2021.Asat30November2019thatbalancedrawndownagainsttheinvoicediscountingfacilityis£78.0m(2018:£37.8m). £75.0m), whichisdependentuponandsecuredagainstassetswithintheGroup.Thefacilitysubjecttoavariablerateofinterest is inplace theGrouphasaccesstoaninvoicediscountingfacilityofup£110.0m(2018:£85.0m)thoughnormallyrestricted£100.0m In theUK, in relationtotheseniorfinancedebtwhichwasre-financedon9December2019. amortised throughtheConsolidatedIncomeStatement,£1.7m(2018:£nil)relatedtofullreleaseofunamortisedfeesasat30November 2019 to avariablerateofinterestandsubjectcertainconditionsisrepayableinfullApril2022.Duringtheyearfees£2.4m(2018:£0.6m) were The Grouphasanexistingseniorfacilityagreementtoborrow£124.0m.issecuredonthesharesofsubsidiariesGroup, issubject Borrowing facilities Finance facilities Bank loans Variable rate Bank loans Finance leaseandhirepurchaseobligations Fixed rate Non-current Bank loans Invoice discountingfacility Variable rate Finance leaseandhirepurchaseobligations Fixed rate Current 20. FinancialAssetsandLiabilities Annual Report and Accounts 2019 Accounts and Report Annual 30 November 214,519 223,864 140,211 127,466 12,745 83,653 77,957 (9,345) 4,942 £’000 754 2019 - 30 November 159,603 173,806 128,989 121,629 (14,203) 44,817 37,798 Restated 2,010 5,009 4,646 2,714 £’000 2018 57

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

20. Financial Assets and Liabilities continued Maturity Profile of Financial Liabilities The maturity profiles (including interest payments in respect of finance lease and hire purchase liabilities) of financial liabilities are shown in the table below:

Due within Between 1 Due after 1 year and 5 years 5 years Total Maturity profile at 30 November 2019 £’000 £’000 £’000 £’000 Financial liabilities Bank loans and interest 754 125,814 1,652 128,220 Invoice discounting facility 77,957 - - 77,957 Trade payables 80,846 - - 80,846 Finance lease and hire purchase obligations 4,942 12,745 - 17,687 Other financial liability - 5,229 - 5,229 164,499 143,788 1,652 309,939

Due within Between 1 Due after 1 year and 5 years 5 years Total Maturity profile at 30 November 2018 £’000 £’000 £’000 £’000 Financial liabilities Bank loans and interest 2,010 124,343 - 126,353 Invoice discounting facility 37,798 - - 37,798 Trade payables 96,254 - - 96,254 Finance lease and hire purchase obligations 5,009 2,617 2,029 9,655 Other financial liability - 3,062 - 3,062 141,071 130,022 2,029 273,122

Foreign exchange differences on retranslation of these assets and liabilities are taken to the Consolidated Income Statement except where those assets and liabilities are held in entities denominated in foreign currency in which case differences are taken to reserves as described in note 1.

The minimum lease payments under finance leases fall due as follows:

Restated 30 November 30 November 2019 2018 £’000 £’000 Within one year 5,936 5,285 Between one and five years 13,259 2,743 After five years 70 2,149 19,265 10,177 Future finance charges on finance leases (1,578) (522) Present value of finance lease liabilities 17,687 9,655

The obligations under finance leases and hire purchase contracts are taken out with various lenders at interest rates prevailing at the inception of the contracts.

Financial risks and capital management Through its operations, the Group is exposed to the following financial risks: • Funding and liquidity risk • Credit risk from trade receivables • Interest rate cash flow risk from variable rate bank loans • Foreign exchange risk

In the process of managing these financial risks, the Group uses the following financial instruments: • Cash at bank • Bank loans • Trade receivables, including amounts owed by associates and joint ventures • Trade and other payables, including amounts owed to associates and joint ventures • Finance leases and hire purchase agreements

58 Level 1: The Groupusesthefollowingvaluation methodsformeasuringthefairvalueoffinancialinstruments Other financialliability(note19) Finance leaseandhirepurchaseobliga-tions Invoice discountingfacility Level 3: Level 2: Bank loans Trade payables Financial liabilities Interest rateswap Trade receivables Cash Financial assets Classification The bookvalueandcomparablefairoftheGroup’sfinancialassets andliabilitiesareshowninthetablebelow. Fair Value ofFinancialAssetsandLiabilities that marketvolumessignificantlyincreaseorincrementalturnoverisobtainedthroughorganicgrowthacquisition. development ofthebusiness.TheGrouphasalsosecuredfinancefacilitiesthatcontainsufficientheadroomtoallowforbusinessgrowth intheevent focuses onthemanagementandcontrolofworkingcapitalinordertoreducenetdebt,whilstallowingforinvestmentassets thefuture development ofthebusinessandthereforecurrentpolicyistoreinvestprofitsratherthanrecommendpaymentdividends.The Groupalso restated: £213.5m).TheGroup’sshort-to medium-termstrategycontinues tobestrengthenitscapitalbaseinordersustainthefuture Capital comprisessharecapital£3.8m(2018:£3.8m),retainedprofits£(256.5)m(2018restated:£(7.2)m)andborrowingfacilities£241.0m (2018 Capital management £0.4m (2018:£0.8mdecreaseinnetassets). exchange risk.TheGroupestimatesthata5%weakeningoftheEurofromyearendratewoulddecreasenetassetsbyapproximately mitigates thetransactionalandfinancialreportingforeignexchangerisk,Boarddoesnotcurrentlyseektohedgeitsexposure risk, primarilywithrespecttotheEuro.DuesignificantdegreeofnaturalhedgingarisingfrompurchasesandreceiptsinEuros,which largely The Company’sfunctionalandpresentationalcurrencyisPound Sterling.TheGroupoperatesinternationallyandisexposedtoforeignexchange (iv) Foreign exchangerisk pre-tax profits). that ariseof0.5%ininterestrateswouldhavereducedpre-taxprofitsbyapproximately£1.0mfortheyearended30November2019(2018: £0.8m requirements andthereforeitsexposuretointerestcost.Assuch,thecurrentvolatilityinratesislimitedGroup estimates rate interestismodelledinitsbudgetsandforecasts.TheGroup’sprincipalstrategytomanagetreasurypositionreduceborrowing Some oftheGroup’sborrowingsareissuedatvariableratesthatexposeGrouptointerestratecashflowrisk.Theexposure tofloating (iii) Interestratecashflowrisk credit risktowhichtheGroupisexposed. as at30November2019isshowninnote16,togetherwithassociatedprovisionsagainstrecoverability, whichgivesanindicationofthelevel emphasis oncreditcontrolandanychangesindebtorpaymentprofilesareidentifiedactedupon.Theageprofileofoutstandingtrade debtors contracts, setscreditlimitsaccordinglyandmonitorsoutstandingreceivablesbalancesinaccordancewiththese.TheBoardplacessignificant as Grouppolicyinotheruninsuredcreditsales,thecarriesoutprocedurestoassessriskofnewcustomersbeforeenteringinto are coveredbyinsurance,with£115.1mat30November2019(2018:£88.7m).Inaccordancethisinsurancepolicy, andalsocarriedout The Group’sprincipalexposuretocreditriskisinitstradereceivablesarisingfromsales.Alargeproportionofthe ii) Creditrisk funding requirementsinthecurrentbusinessplan. finance providersinordertoensurethatitisawareofallpossiblesourceswhenassessingtheavailabilityandcostprovidingfor banking covenantstoensurethatitremainscompliantwiththeirrequirements.TheGroupalsomaintainsanactivedialogueawiderangeof facilities andtoidentifyanyrequirementforfuturefundingfacilities.TheGroupmonitorsitscurrentforecastfinancialperformanceagainst longer-term cashforecastingtomonitoritsexpectedfundingrequirementsinordermeetcurrentbusinessplan,thecontextofexisting short-term cashforecastingtomonitoritsexpectedflowsagainstavailabilityandfinancefacilities.TheGroupalsoundertakes The Groupfinancesitsoperationsbyacombinationofequity, bankloans, leases,workingcapitalandretainedprofits.TheGroupundertakes (i) Funding andliquidityrisk adverse effectsontheGroup’sfinancialperformance.Thepoliciesandstrategiesformanagingspecificrisksaresummarisedasfollows: The Group’soverallriskmanagementprogrammefocusesonreducingfinancialasfarpossibleandthereforeseekstominimisepotential 20. FinancialAssetsandLiabilitiescontinued

Other techniques forwhichallinputshavea significant effectontherecorded fair valuearenotbasedondatafrom activemarkets. Other techniques forwhichallinputshavea significant effectontherecorded fair valuearebasedondatafrom active markets. Quoted pricesin active marketsforidenticalassets orliabilities. Level 3 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 1 Valuation method Book value 2,2 128,220 128,220 2,7 124,979 124,979 76717,687 77,957 17,687 77,957 08680,846 80,846 ,2 5,229 5,229 ,4 9,345 9,345 56 (536) (536) £’000 2019 Fair value £’000 Annual Report and Accounts 2019 Accounts and Report Annual Book value 2,5 126,353 126,353 3,0 138,108 138,108 77837,798 37,798 624109,125 96,254 42314,203 14,203 ,6 3,062 3,062 ,5 9,655 9,655 £’000 9 399 399 2018 Fair Value £’000 59

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

21. Provisions

Motor Onerous Employee Dilapidations insurance leases claims Other Total £’000 £’000 £’000 £’000 £’000 £’000 Restated balance at 30 November 2017 10,451 5,120 - 847 - 16,418 Provisions charged to the income statement 757 4,219 - 1,869 - 6,845 Provisions credited to the income statement (1,845) (757) - - - (2,602) Provisions paid (7) (4,360) - (1,912) - (6,279) Asset additions 296 - - - - 296 Transfers in 569 - - - - 569 Discount unwind 28 - - - - 28 Acquired during the year 1,894 - - - - 1,894 Movement in foreign currency translation 21 - - - - 21 Total 1,713 (898) - (43) - 772 Restated balance at 30 November 2018 12,164 4,222 - 804 - 17,190 Provisions charged to the income statement 1,296 5,453 3,246 538 2,089 12,622 Provisions credited to the income statement (592) - - - - (592) Provisions paid - (4,215) (393) (451) - (5,059) Asset additions 1,072 - - - - 1,072 Transfers in 430 1,072 - - - 1,502 Discount Unwind 36 - - - - 36 Movement in foreign currency translation (24) - - - - (24) Total 2,218 2,310 2,853 87 2,089 9,557 Balance at 30 November 2019 14,382 6,532 2,853 891 2,089 26,747

Restated November 30 November 2019 2018 Analysis of total provisions: £'000 £’000 Current 12,818 8,748 Non-current 13,929 8,442 26,747 17,190

Dilapidations A provision is held across the Group property portfolio for future dilapidation costs and site restoration. Provisions are established over the life of leases to cover remedial work necessary at termination under the terms of those leases. The contractual termination dates of the Groups current leases are between March 2020 and December 2047.

Motor Insurance A provision is held against the cost of motor accidents below that covered by our insurance policies. These cases are managed through a specialist independent claims management handler and the provision is held to cover the estimated future liability to the Group.

Onerous lease An onerous lease provision has been recognised relating to a number of specialist vehicle leases following the exit of a contract in the year, and property leases where the property is surplus to operating requirements. This is based on the remaining term of the lease (leases run until March 20 - November 2025) as there is no contractual break clause, unless, an early termination date is known and confirmed. The provision involves an estimate of the residual values of the assets on lease, any sale gain/loss that could occur upon disposal of the assets or any estimated exit costs for the surrender of a property lease prior to the end of the lease term.

Employee claims The Group has various ongoing and potential litigation and claims, principally relating to accidents in the workplace. These cases are being managed through a specialist independent claims management handler and a provision is held to cover the estimated future liability to the Group.

60 Deferred taxasset Other temporarydifferences Other temporarydifferences Accelerated capitalallowances Losses Deferred taxliability Losses Deferred taxliability Revaluations Total unrecognisedlosses Other temporarydifferences Accelerated capitalallowances Revaluations other temporarydifferencesgivingrisetodeferredtaxassetsbecauseitisprobablethatthesewillberecovered. Deferred taxassetshavebeenrecognisedinrespectofpensiondeficits,thefairvaluefinancialinstruments,acceleratedcapitalallowancesand Deferred taxationcarriedforward Acquisition ofbusiness Transfers Credited/(charged) totheconsolidatedincomestatement Loan relationships Capital losses Non-trading losses Unprovided deferredtaxassets,whichareunprovidedbecausethey maynotberecovered,areasfollows: Deferred taxasset Intangible assets Intangible assets Adjustment inrespectofprioryears Restated deferredtaxbroughtforward Prior yearadjustments Deferred taxbroughtforward 17% (2018:17%). Deferred taxiscalculatedinfullontemporarydifferencesusingtheliabilitymethod,andpredominantlyrelatestoUKbalances,arateof 22. DeferredTax 30 November 30 November 30 November 30 November Restated At Restated At Restated At Restated At 1,0)(,4)- (14,342) 7 - (3,343) (11,006) 1,2)1,5 567 7(11,006) 17 (5,657) 11,055 (16,421) 1,5)762(,5)17 (5,657) 7,682 (12,756) (3) - (3,343) (10,714) 220(,8)35(8 3,142 (68) 325 (9,385) 12,270 784 ,5 (,7)(581) (1,376) - 8,659 (7,864) 411 ,7 532 5)(7,864) (51) (5,332) 1,670 (4,151) 333 ,7 - - 3,373 (3,373) ,4 202- 133 13,761 (1,383) - 12,002 3,142 ,9 ,7 166 - 7,277 2,395 ,9 411 (410) - (4,191) 6,996 ,6 574 1 (438) 319 (5,744) 5,863 22 - - - - (292) 59 5 780 6 550 (589) 10 - - (292) £’000 £’000 4 ,2 643 - 1,825 747 2018 2017 290- (2,192) - 2,900 - Consolidated Consolidated Consolidated Consolidated Statement Statement Income Income Income Income £’000 £’000 Combinations Combinations Acquired with Acquired with Acquired with Acquired with Business Business Business Business £’000 £’000 Annual Report and Accounts 2019 Accounts and Report Annual 30 November 30 November Adjustment in Adjustment in Adjustment in Adjustment in prior years prior years respect of respect of respect of respect of (7,864) (7,864) 7,465 2,898 7,294 2,407 2,160 (581) £’000 £’000 £’000 £’000 2019 2019 (11) - - - 30 November 30 November (10,714) (14,060) November November November November (9,001) (5,332) (7,864) Restated Restated (4,151) 3,215 9,838 2,395 3,129 1,670 1,468 4,850 (292) (282) £’000 £’000 756 708 747 At 30 At 30 At 30 At 30 £’000 £’000 2019 2018 (51) 905 2018 2018 - - - 61

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

23. Capital and Reserves Share capital and share premium No. of Shares Merger shares Share capital premium reserves ’000 £’000 (’000) £’000 Ordinary shares in issue at 30 November 2017 357,918 3,579 117,257 7,950 Share issue 21,429 214 28,745 -

Ordinary shares in issue at 30 November 2018 379,347 3,793 146,002 7,950 Ordinary shares in issue at 30 November 2019 379,347 3,793 146,002 7,950

All of the ordinary shares in issue referred to in the table above are fully paid.

Ordinary share capital & share premium & merger reserve Prior to the IPO in April 2017, the Company performed a share split, with the consequence that ordinary share capital reduced from £1 par value to 1p par value per share. Also prior to the IPO, share premium was cancelled in order to convert into distributable reserves. A bonus issue of shares was granted to the current shareholders at the same time.

On 25 April 2017 the Company placed 76.25m Ordinary 1p shares with an attached merger reserve of 159p per share (the total listing price being 160p per share) on AIM.

The Company also issued 5m ordinary 1p shares, with an attached share premium of 159p per share (total value (160p per share) to the shareholders of iForce Group for their interests in the business.

On 28 June 2018 the Company placed 21.43m Ordinary 1p shares with an attached share premium of 139p per share (140p per share in total), to provide part of the funding for the acquisition of the TPN Group.

Own shares Included in the total number of ordinary shares outstanding above are 1,690,000 (2018: 1,690,000) ordinary shares held by the Group’s employee benefit trust. The ordinary shares held by the trustee of the Group’s employee benefit trust pursuant to the SIP are treated as Own shares in the Consolidated and Company’s Balance Sheet in accordance with IAS 32.

Nature and purpose of reserves i. Translation reserve - represents the gains and losses arising on retranslating the net assets of overseas operations into Sterling. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

ii. Own shares reserve – This reserve arose when the Group issued equity share capital under its Share Incentive Plan (SIP) which is held in trust by the trustee of the Group’s employee benefit trust. If these shares are forfeited throughout the vesting period for leavers or another reason they will continue to be owned by the trust and therefore will continue to be presented within Own shares in the Group financial statements.

iii. Share options reserves – consist of provisions made during the financial year relating to Long-Term Incentive and Management Incentive Plans for future liabilities relating to management and employee share-based incentive scheme payments, further details are disclosed in note 24.

24. Share-based Payments As at 30 November 2019, the Company operated the following share award plans: • Long-Term Incentive Plan; • Management Incentive Plan; and • Share Incentive plan.

There were no exercisable options under the above schemes as at 30 November 2019 (2018: £nil).

Long-term incentive plan (LTIP) The LTIP was approved by the Board on 18 April 2017 enabling the Group to award options on shares to key employees following admission to the Alternative Investment Market (AIM) on the London Stock Exchange. Awards were granted during the year ended 30 November 2017, giving award holders the right to exercise nil-out options at the end of the three year period from the date of the award, dependent on;

• The level of growth in earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending 30 November 2017 of £56.8m; and • achievement of 10% compound growth in the total shareholder return (TSR) over the period from the date of admission to trading on the London Stock Exchange (25 April 2017) to the third anniversary of admission.

62 Fair valueincomestatementchargeofMIPscheme for valuingtheEPSconditionandMonteCarlosimulationTSRcondition.Theinputsintomodelswere: The fairvalueoftheoptionsgrantedduringyearended30November2018wasdeterminedusingBlackScholesMertonoption pricing model LTIP obligationsasfollows; calculated. Thisvaluationhasbeencalculatedandprovidedbyanindependentthirdpartywhohaveadvisedthedirectorsoffairvalue andfuture knowledgeable andwillingmarketparticipantwouldpayforthesharesassuchnoadjustmenttofairvalueofLTIP shareshasbeen in theCompanyaretradedonAIMmarketofLondonStockExchange,restrictionwouldhaveanegligibleeffectprice that a Under IFRS2thereisarequirementtoconsiderpost-vesting restrictions tobeincorporatedincalculatingthefairvalueforLTIP award;asshares participators orthefourthanniversaryofgrantingLTIP, whicheveristheearliest. settled forthisvaluation.TheLTIP awardalsogivesrisetopost-vesting restrictiononthesharesforaperiodof12monthsfromdateissueto F • • • IFRS 2statesthatthereispresentobligationtosettleincashif: • • three yearperiodfromthedateofaward,dependenton; Additional awardsweregrantedduringtheyearended30November2019givingawardholdersrighttoexercisenil-outoptionsatendof 24. Share-basedPayments continued required underIFRS2. The chargerecognisedintheyearincludesreleaseofliability inrespectofDHarteandaccelerationtheliabilityALaffeyas interest intheMIP, allsharesweretransferred toEddieStobartLogisticsplcleavingnofurtherinterestinthescheme. On 31March2019DHarteresignedthereforeterminatinghisservice withEddieStobartLogisticsplcandon8May2019ALaffeyterminatedhis the fourthanniversaryofMIPshareissuewhicheverisearliest. ordinary sharesintheCompany, theMIPparticipantsarerestricted fromselling50%oftheirallotmentfora12monthperiodthedateissueor The Company, atitsdiscretion,maypurchasetheMIPsharesforcashorbyissuingordinary sharesintheCompany. Whereparticipantsreceive exercised isreferredtoastheExerciseDate. year periodfromthedateofaward.TheCompanyalsohasacorresponding callrightattheendofthisperiod.Thedateonwhichis Harte subscribedfor20,000A2ordinarysharesat£2.00pershare.TheparticipantshavetherighttosellalloftheirMIPend ofthethree A Laffeysubscribedfor60,000A1ordinarysharesinGreenwhitestarAcquisitionsLimited,asubsidiaryoftheCompany, at£0.65ppershareandD The MIPwasapprovedbytheBoardon25April2017.CompanyenteredintoarrangementswithtwoparticipantsALaffeyandD Harte. Management incentiveplan(MIP) LTIP optionswas£0.1m. The estimatedfairvalueofoptionsgrantedintheyearended30November2019was£1.3m.totalexpenserecognised respectof Expected volatility Expected dividendyield Risk freerate Expected term Exercise price Share price or theGroup,noneofaboveapplyandthereisnoassumedobligationtosettleincash,consequentlyLTIP awardwillbetreatedasequity

the entitygenerallysettlesincashwhenevercounterpartyrequestssettlement. the companyhasapastpracticeorstatedpolicyofsettlingincash; the choiceofsettlementinequityhasnocommercialsubstance;or the perioduntillastdayofrelevantfinancialyear(30November2021) The growthinshareholderreturn(TSR)overtheperiodachievesequaltoorgreaterthancompound10%perannum,startingonfirstdayof 30 November2021 Achieve compoundgrowthofatleast10%perannuminearningsshare(EPS)fortheyearsended30November2019,2020, the endofyears1,2and3 Third ofthesharesvestat Black Scholes Black Scholes 0.72% 96.5p 31% 7% Nil Annual Report and Accounts 2019 Accounts and Report Annual the endofyears1,2and3 Third ofthesharesvestat 1,029 £’000 2019 Monte Carlo Monte Carlo 0.72% 1,647 96.5p 115p 31% £’000

2018 7%

63

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

24. Share-based Payments continued Management incentive plan (MIP) The SIP was approved by the Board on 25 April 2017. The SIP is an equity settled share incentive plan approved by HMRC. The purpose of the SIP is to be a free share issue to staff fully funded by funds from the outgoing parent shareholder. The SIP shares are held in trust by independent third party trustees for specified employees, but may be forfeited during a three year period that commenced from 30 June 2017 in certain circumstances.

The number of shares held in trust are 1,687,500 Ordinary £0.01p shares at a cost of £1.60 per share with a market value of £2.7m. All of the shares were fully paid for by the outgoing shareholder and parent. The employees who participated in the SIP are the Company’s Executive Directors and employees, including the employees of the Company’s subsidiaries, as at 30 June 2017.

The SIP also allows for the extension of the SIP to allow additional employees to participate at the discretion of the Board.

The current and future charge to the Income Statement is detailed below; Future obligations Greater than Total 12 months 2020 2019 £’000 £’000 £’000 £’000 Fair value charge of Employee Benefit Trust SIP Scheme 2,072 - 374 1,698

25. Operating Lease Arrangements At the year end the Group had outstanding commitments under non-cancellable operating leases, which fall due as follows:

2019 2018 Plant and Land and Plant and Land and equipment buildings equipment buildings £’000 £’000 £’000 £’000 Within one year 43,526 51,667 52,239 46,986 Between one and five years 76,407 194,660 91,082 179,624 Due after five years 8,853 397,623 12,618 447,364 128,786 643,950 155,939 673,974

26. Related Party Disclosures and Ultimate Parent Undertaking During the year the Company and or its subsidiaries entered into commercial transactions with related parties as shown in the table below.

Purchases Balance owed Balance owed Sales to from related by related to related Description of related party party party party 2019 Related Party Disclosures related party £’000 £’000 £’000 £’000 Directors’ loans a - - 475 - IPS at Eddie Stobart Limited b 2,758 - 847 - Puro Ventures Ltd trading as Speedy Freight c 1,184 1,274 751 330 Harvey Nash Plc d - 8 - - Nelson Bostock e - 38 - 38

a. In February 2015, two directors of a subsidiary company were loaned an aggregate amount of £475,000, at 3% plus RBS base rate non-compound interest, repayable in full as at February 2022.

b. IPS at Eddie Stobart Limited is a joint venture participation. IPS at Eddie Stobart Limited provides logistics and management services.

c. Puro Ventures Limited, trading as “Speedy Freight”, is a joint venture participation with fellow Group member ESLL Limited. Speedy Freight operates as a same day specialist courier.

d. Harvey Nash Plc is a recruitment agency and a related party by virtue of its association with the Ultimate Parent Undertaking, DBAY.

e. Nelson Bostock is a PR consultancy firm and a related party by virtue of its association with the Ultimate Parent Undertaking, DBAY.

Purchases Balance owed Balance owed Sales to from related by related to related Description of related party party party party 2018 Related Party Disclosures related party £’000 £’000 £’000 £’000 Directors’ loans a - - 475 - IPS at Eddie Stobart Limited b 2,795 - 553 - Puro Ventures Ltd trading as Speedy Freight c 772 562 320 304 Harvey Nash Plc d - 30 - -

On 25 April 2017 Eddie Stobart Logistics plc was listed on the Alternative Investment Market of the London Stock Exchange. As a consequence the Group has a new board of directors and a change in the shareholder base occurred. In view of this change, management have re-evaluated the nature of existing relationships and noted that some have ceased to be related parties.

64 d. c. b. 10 shareholders such thattheCompanyanditsshareholders canparticipate. Loan Notes(oran equivalenteconomicinterest)to 9September2020.Thiswillalign the economicinterestsofDBAY andthe Company’s fundraising. DBAY hasconfirmed theextensionofCompany’sright,referredtoinCircular, toacquireup49percentoftheoutstanding potential investors,anditisexpected that,asindicatedintheCircular, DBAY wouldactastheCompany’sinvestmentmanagerfollowing asuccessful remain quotedonAIM.TheBoard isexploringarangeofalternativestructuresandinvestmentstrategies andistakingadviceontheprioritiesof The Boardiscontinuingtoexplore opportunitiestoraiseadditionalfundspermittheCompanybecome an‘AIMinvestmentcompany’and AIMhasagreedwiththeCompanyanextensionto thistimelineto9December2020. activities andnotingtheCompany’s retainedinterestinGWSA, pandemic hasimpactedpublicfundraising company andcompleteanequity fund raiseofatleast£6million,by9June2020.TheglobalCOVID-19 The Companybecameacashshellon9December2019andsoitis requiredtocompleteareversetakeover, orbecomeanAIMinvestment via anequityfundraisingandpublishingadmissiondocument)is treatedasareversetakeover. of theDisposal.For thepurposesofthisrequirement,becominganAIMinvestmentcompany(which entailsraisingaminimumof£6millionincash in ordertoremainquotedonAIM,wasrequired,interalia,complete anacquisitionoracquisitionsconstitutingareversetakeoverwithinsixmonths Following completionoftheDisposal,Companybecamea‘cashshell’pursuanttoAIMRulesforCompanies(the“AIM Rules”)andtherefore, Company Status • • • The completionofthetransactionincludedextensionexistingbankingfacilitiesandanadditionalinvoicediscountingfacilityas follows: year end,whichwerecontingentonthetransactiongainingshareholderapproval. controlled bytheacquirerof51%stakeinGWSA(the“LoanNotes”).Afurther£2.74mprofessionalandadvisorcostswereincurred afterthe interest intheEddieStobarttradingentitieswasreducedfrom100%to49%.OncompletionofDisposalGWSAissuedloannotes anentity (including EddieStobartLimited,iForce GroupLimitedandThePallet Network).Accordingly, asaresultoftheDisposal,Company’sequity 51% equitystakeinGreenwhitestarAcquisitionsLimited(“GWSA”) (the“Disposal”),theholdingcompanyofEddieStobarttradingentities On 9December2019DouglasBayCapitalIIIFund LP, afundmanagedbyDBAY AdvisorsLimited(“DBAY”) completedtheacquisitionofanindirect T 29. Subsequentevents At 30November2019,theGrouphadnocapitalcommitments(2018:£nil). 28. Capitalcommitments This obligationwasnovatedtoGWSAonexecutionoftheDBAY transaction9thDecember2019. with anyproceedingsagainstthesaidDirectorsorcontractorsfornegligence,default,breachofdutyotherwise,subjecttonormalexclusions. In thenormalcourseCompanyhasindemnifiedanumberofDirectors,Officersandcontractorsagainstliabilitiesarisingoutorinconnection claims asitismanagement’sbeliefthatthehavelittlemerit. of suchissues,nonewhichareexpectedtoresultinamateriallosstheGroup.TheGrouphasnotbookedanyprovisionsassociatedwith The Grouphascontingentliabilitiesinrespectofunsettledlegalclaimsandcontractdisputes.receivedanumber indemnified byallcompaniesintheGWSALtdgroup. ESLL GroupLtdhasacontingentliabilityinrespectofmotorinsurancebondtomaximumaggregate£11.7m.Thebeen potential liabilityat30November2019was£124.0m(2019:£124.0m). There isanunlimitedbankcrossguaranteearrangementbetweentheCompanyandcertainofitsmaterialsubsidiaryundertakings.Themaximum 27. Contingentliabilities baseratenon- ebruary 2015,twodirectors ofasubsidiarycompanywereloanedanaggregateamount£475,000,at3%plusRBS a. 26. RelatedParty Disclosuresand UltimateParent Undertakingcontinued £45m. From 9December2019thenon-controllinginvestmentinEddieStobartbusinesswillbeequityaccountedand initiallyrecognisedat Stobart businessofcirca£95mandrecogniseddeemedconsideration of£45m,generatingaprofitondisposalcirca£140m. On disposalofitscontrollingholdingintheEddieStobartbusiness CompanyinitsconsolidatedaccountsdisposedofnetliabilitiestheEddie is dependentonfundingprovidedindirectlybyMarcelosLimited,aholdingcompanyofGWSA. Company tomonitoritsinterestinGWSAandcomplywithreportingobligations.Thedoesnothaveanyexecutivemanagement and of theEddieStobarttradingentitiesandleadershipteamDBAY providetimelyinformationabouttheEddieStobarttradingentitiestoenable Saki Riffner, Non-ExecutiveDirectoroftheCompanyandChiefInvestmentOfficerDBAY, Theexecutiveleadershipteam isalsoadirectorofGWSA. ransaction £50m netof £5mretainedinMarcelos Limitedrelatingto transactioncosts.

Harvey NashPlcisarecruitmentagencyandrelatedpartybyvirtueofitsassociationwiththeUltimateP operates asasamedayspecialistcourier. P IPS atEddieStobartLimitedisajointventureparticipation.provideslogisticsandmanagementservices. The provisionofanincremental£20minvoicediscountingfacilitywhichhasbeenmadeavailableatthesametimeas£50m The ongoingprovisionofthe£100minvoicediscountfacilityuntil22November2024;and August 2021; The ongoingprovisionofthe£124mtermloanwhichhasbeenextendedtoNovember2024andsubjectrepayment£35minstages by Company oranycompanyintheGroupatyearend. during theyearbeforebeingpaidoutonhisbehalftoathird-partyundersametermsavailableGroup.Thereisnobalancedue compound interest,repayableinfullasatFebruary 2022.Inaddition,amountstotalling£15,000werereceivedbythecompanyfromaDirector In F issued, whichisdueforrepaymenton9December2025. uro Ventures Limited,tradingas“SpeedyFreight”, isajointventureparticipationwithfellowGroupmemberESLL Limited.SpeedyFreight

arent Undertaking,DBAY. Annual Report and Accounts 2019 Accounts and Report Annual 10 PIKnotewas

65

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

29. Subsequent events continued COVID-19 The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections. Measures taken by various governments to contain the virus have affected economic activity. The group has taken a number of measures to monitor and prevent the effects of the COVID-19 virus. These have included health and safety measures for our people and within our investment (like social distancing and working from home).

At this stage, the impact on our business is limited. The business is a cash shell and the COVID-19 outbreak has had the impact of extending the timeframe to become an AIM investment company.

We will continue to follow the various national institutes’ policies and advice and in parallel will do our utmost to continue our operations in the best and safest way possible without jeopardizing the health of our people.

Property lease novations Post year end, and in line with the strategy of the new management of the Eddie Stobart business, a number of property leases have been surrendered or novated where there is under-utilisation of warehouse space. This has resulted in the release of any associated liabilities in FY20 totalling £5.4m net of costs associated with the transactions.

Brand acquisition The Eddie Stobart business has acquired the “Eddie Stobart” and “Stobart” brands from a subsidiary of Stobart Group Limited, the main market listed aviation and energy group. Total cash consideration of £10 million is payable by the group’s trading entity, Eddie Stobart Limited, of which £4 million is deferred (with £2.5 million payable in December 2020 and the remaining £1.5 million within 36 months), and Stobart Group Limited is required to change its name by 28 February 2021.

Prior to acquiring the Eddie Stobart brand, the Eddie Stobart business used the brand under a 2014 licence agreement and an annual fee of £3 million had become payable from 1 March 2020. This licence arrangement has now been terminated resulting in a cost saving for the Eddie Stobart business of £3 million per annum. The acquisition of the brand will help stakeholders more easily to differentiate between the Eddie Stobart business’s logistics business and the Stobart Group’s aviation and energy businesses, as the Stobart Group will transition to a different name.

30. Prior year restatements The Group has implemented IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, both effective for the first time for the financial year beginning on 1 December 2018. The Group has elected to restate comparative information in accordance with the relevant transition provision. This note explains the impact on the Group’s accounts of the adoption of IFRS 9, IFRS 15 and the restatement of prior year comparatives for lease incentive accounting, the accounting for Speedy Freight as an associate and other historical items.

Restatements to previously reported profit Speedy Freight Consolidation On 8 July 2017 the Group purchased 50% of the shares of Puro Ventures Limited, which trades as Speedy Freight. The Group’s shareholding was subsequently reduced to 47.5% due to a share issue and re-classification but the Group retained 50% of the voting rights. Speedy Freight operates a franchise model, specialising in urgent business to business, same day deliveries.

Following the acquisition it was determined that the Group exercised control over the business (based on a number of factors including the on-going contractual arrangements with the other shareholders, including put and call options) and consequently the results of Speedy Freight have previously been fully consolidated in the audited financial statements of the Group in FY17 and FY18.

During the review of the HY19 results, this judgement has been reconsidered and it has been determined that a more appropriate treatment is to account for Puro Ventures Limited as an associate and therefore not to consolidate its results, in line with the requirements of the accounting standards. This has had a negative impact on the underlying operating EBIT for FY18 of £1.0m. The Company’s consolidated results for FY18 are restated to reflect this.

Property-related activities Since 2016, the Group has focused on developing a full-service logistics business aligned to the needs of its road transport and e-commerce focused customers, in part by expanding its warehouse footprint and capacity. In recent years, a material proportion of the Group’s profits have been derived from the opportunities afforded by this expansion, with the Company acting as anchor tenant for completed developments, and receiving income from property consultancy services relating to development activities (including consultancy advice on process, planning, facilitation and debt structuring). The Board considered these activities to be integral to the Group’s logistics activities and accounted for them as such.

A critical judgment on transactions with multiple elements is the allocation of consideration between the separate elements of the transaction. The Group has historically entered into combined lease and property consultancy transactions with third parties where they provide consultancy services and advice to companies with whom they also enter into long-term lease commitments. At the conclusion of the consultancy services and the inception of the lease, the Group typically receives a large payment. Under the previously adopted policies, having demonstrated the on-going lease terms were considered to be at or below market value, the Group attributed all the consideration received to property consultancy services. Having reconsidered the accounting guidance, the Group has noted the difficulty in benchmarking the revenue recognised on consultancy services provided with market transactions for similar services. Conversely, the guidance for accounting for lease incentives received requires they are amortised over the life of the lease without reference to whether the resulting lease charge (net of incentives) represents a market rate. Consequently, the Group has determined that a more appropriate way to account for these combined lease and consultancy services transactions is to treat all the consideration as a lease incentive and allocate no revenue to consultancy services.

66 • the particularperformance obligationistransferred tothecustomer. Under IFRS15,anentityrecognises revenuewhenorasaperformanceobligationissatisfied,i.e. ‘control’ofthegoodsorservicesunderlying adopt thefullyretrospectiveapproach withrestatementofcomparatives. current revenuerecognitionstandards andinterpretations.TheGroupisrequiredtoadoptIFRS15for theyearended30November2019andwill IFRS 15establishesasinglecomprehensive modelwhenaccountingforrevenuearisingfromcontracts withcustomers.IFRS15willsupersedethe IFRS 15RevenuefromContracts withCustomers The Groupdoesnotcurrentlyholdanyderivativefinancialinstruments designatedashedgerelationships. Hedge Accounting the overallimpactisadecreaseofretainedearnings£3.5m. by IFRS9.Theapplicationoftheexpectedcreditlossmodel 9willresultingreaterrecognitionofcreditlosses,andasat1December2018, The Grouphasappliedthesimplifiedapproachtorecogniselifetime expectedcreditlossesforitstradereceivablesandcontractassetsaspermitted necessary foracrediteventtooccurbeforethelossesarerecognised. The impairmentmodelunderIFRS9reflectsexpectedcreditlosses, asopposedtoincurredcreditlossesunderIAS39.UnderIFRSitisnot Impairment fair valuethroughprofitandloss.Therehasbeennochangesinthe classificationoffinancialassetsorliabilitiesasaresultIFRS9. IFRS 9establishesthreeprimarymeasurementcategoriesforfinancial assets:amortisedcost;fairvaluethroughothercomprehensiveincomeand Classification andmeasurement IFRS 9‘FinancialInstruments’,addressestheclassification,measurementandrecognitionoffinancialassetsliabilities. IFRS 9FinancialInstruments Fully retrospectiveapplicationofnewaccounting standards • • cash flowstatementasaresultoftherestatements.Themainchangesare: There havebeennodirectcashoutflowsasaresultoftheprioryearrestatements.However, changeshavebeenrequiredtothepresentation ofthe Cash flowstatement for FY18,FY17andprioryearshavebeenmadetoreflectthis. debtors andcreditorswherebythereisalegalwriteofoffsetthereclassificationintangibleassetsfromprepayments.Restatements ofresults implementation ofnewaccountingstandardsaswellbalancesheetreclassificationtheinvoicediscountingfacilityintoborrowings, theoffsetof sheet assetsandreassessmentofintangibleassetrecognition,increasedexpenseinrelationtoleaseaccounting,costaccrualsprovisions and in respectofdebtorsdueconnectionwithunderperformingandexitedcontracts,revenuerecognitionwritedownsunrecoverable balance A numberofotheraccountingadjustmentshavebeenmade.Theserelatetothereassessmentatrespectivebalancesheetdates, writedowns Other increased incomestatementchargeof£0.7min2018,and£5.7mrespectpreviousperiods. determination hasbeenreviewed,andthefinancialstatementshaverestatedtoreflectadilapidationprovision.Thisresultedinan Given theexpansionofwarehouseportfolioGroupovercourselastfewyearsthataresubjecttodilapidationclauses, very highstandard. Historically, theGrouphasdeterminedthatdilapidationsprovisionswerenotrequiredasthereisapolicytoensurewarehousesaremaintained Dilapidations adjustment togoodwillof£7.9mandsubsequentrecognitiontheleaseliability, increasingthe2018chargetoincomestatementby£1.8m. with IFRS3anacquirershouldnotrecognisethedeferredleaseliabilitiesofacquireeuponacquisitionandthereforethishasledtoacombined The GrouphasrestatedthefinancialstatementstoaccountforleasecostsovertermofinlinewithIAS17.Inadditionaccordance Lease accounting reflecting thebenefitofamortisationleaseincentivesonunexpiredleasesenteredintoinpast. exclusive ofanyestimatedtaxreduction.Thisalsomeansthatinfutureyears,recognisedleasecostswillbelowerbyapproximately£4mperannum, resulted inareductionpreviouslyreportedEBITthoseyearsandnetadjustmenttotheGroup’sassetsat30November2018of£60.6m, prior tofinancialyear2017hasbeenreversedandrestated,theamountrelatedtheseactivitiesrecognisedoverlifeoflease.This Approximately £17mand£33mderivedfromthoseactivitiesforfinancialyear20172018(respectively)approximately£13m 30. Prioryearrestatementscontinued

owners ofSpeedyFreight whicharelinkedtoservicesconditionspresented aspartofcashgeneratedfromoperatingactivities. investments madein,anddividendsreceivedfrom,SpeedyFreight arenowpresentedwithininvestingactivities.Payments madetotheprevious Cashflows fromSpeedyF Lease incentiveinflowsonpropertytransactionsarenowpresentedinaseparatelinewithinoperatingactivitiestoaidtransparency to thecashbalance. Classification oftheinvoicediscountingfacility£10.9masborrowingsat30November2018.Thiswaspreviouslypresentedareduction reight arenolongerincludedwithintheGroup’scashflowsasSpeedyFreight isnowtreatedasanassociate.Instead, Annual Report and Accounts 2019 Accounts and Report Annual . 67

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Consolidated Financial Statements continued for the year ended 30 November 2019

30. Prior year restatements continued IFRS 15 Revenue from Contracts with Customers (continued) TThe Group recognises revenue from the following major sources:

Area Explanation IFRS 15 Impact Open book revenue Open book con-tracts will typically cover Revenue relating to costs to serve the customer costs plus an agreed fixed or variable are invoiced in line with the customer receiving manage-ment fee. and consuming benefits under the contract, and is recognised in the period in which it is earned.

Performance obligations are measured against minimum service level agreements. There has been no change in the timing of revenue recognition on application of IFRS 15. Closed book revenue Revenue for closed book con-tracts is Revenue based on a pre-agreed rate-card is recog-nised based on a pre-agreed recognised as services are provided, in line with rate-card per unit/ de-livery. the customer receiving and consuming benefits under the contract. There has been no change in the timing of revenue recognition on application of IFRS 15. Membership fees Membership fees (fixed). Membership fees are recognised over the term of the contract. There has been no change in the timing of revenue recognition on application of IFRS 15. Performance-related revenue Revenue linked to performance measures, Variable revenue is recognised to the extent the such as Key Performance Indicators (KPIs) performance obligation has been satisfied and and gain-share mechanisms. it is highly probable a significant revenue reversal will not occur. This has resulted in the derecognition of revenue that met the criteria under IAS 18 (probable of receipt) but does not meet the revised criteria under IFRS 15.The impact of which can be seen in the full year restatement table below. Carrier management Licensing of carrier management soft-ware Revenue related to licensing of carrier and provision of carrier man-agement management software and provision of services services. is recognised over the term of the contract. This has resulted in later recognition of revenue for some contracts. Sale of goods Sale of goods to final consumers. Revenue on sale of goods is recognised at the point in time the customer receives control of the goods. There has been no change in the timing of revenue recognition on the application of IFRS 15

68 Diluted –totaloperations Basic –totaloperations Earnings pershare Profit/(Loss) fortheperiod Income taxcredit/(expense) Profit/(Loss) beforetax exceptional items Equity accountedinvestees: accounted investees Share ofpost-taxresultsequity Net financeexpense Total financeexpense items Finance expenses:exceptional exceptional items Finance expenses:before Finance income items activities: beforeexceptional Profit/(Loss) fromoperating activities Profit/(Loss) fromoperating Total administrativeexpenses items Administrative expenses:exceptional exceptional items Administrative expenses:before Amortisation ofintangibles Credit lossoncontractualassets intangibles andexceptionalitems before amortisationofacquired Administrative expenses: Gross profit Cost ofsales 30. Prioryearrestatementscontinued Revenue Continuing operations 30 November 30 November year ended (150,775) (143,001) (129,183) (662,682) Previously Previously 8,5 447 3,5)- (31,256) (4,487) 180,459 843,141 (13,818) reported reported 625(9)(537 140 69 662 233 105 3,8)(21,541) (37,786) (22,255) (1,025) (45,879) (2,353) (1,265) (6,612) (2,977) (699) (6,996) (1,490) (959) (25,317) (1,841) (290) (31,256) (8,987) (585) 16,245 (46,445) (14,099) 23,624 (1,265) (43,783) (1,265) (2,977) (6,998) (2,977) (6,997) (931) (931) (1,841) (31,256) (1,841) (1,177) (31,256) 37,458 1,484 29,684 (6,584) (6,599) (6,110) (7,774) 739 9 ,3 5 6 8 2 4 ,9 714 8,093 240 624 384 260 351 5,939 295 (7,379) £’000 (489) 4.4p 4.4p 2018 524 15 - - cation as an cation asan reclassify- associate 2,6)(31,695) (25,365) 088439 20,878 Speedy Speedy (2,917) 2,661 5,971 3,310 2,650 £’000 660 815 33 37 37 (4) - - Incentives Lease Lease £’000 ------181 91 203 (2,977) (2,033) (931) (2,977) (2,034) (1,841) 1 (931) - (1,841) (2,034) - (931) (1,841) - - - - - Accounting Lease Lease £’000 ------(28) (28) - - (28) - - Dilapidations £’000 494 125 4,7)138,487 (41,972) (1,265) - (4,964) ------334 (1,265) - (3,354) - - 160 - (1,610) - Other £’000 1 1 1 - (2,978) ------IFRS 9 £’000 ------IFRS 15 £’000 Annual Report and Accounts 2019 Accounts and Report Annual (2,917) - (3) ------815 - (1,811) - - - - adjustments Total prior 6,7)781,462 (61,679) 977(642,975) 19,707 298 (2,978) (2,978) 443 (147,474) (4,473) (131,338) (2,155) ,6 (5,112) 2,662 £’000 6 (13,158) 660 year year 6 9 9 - 30 November 30 November year ended (152,586) Restated Restated (2,917) (6,578) (6,590) (6,101) 1,339 (5.9p) (5.9p) (489) £’000 2018 12 69

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Company Financial Statements continued for the year ended 30 November 2019

30. Prior year restatements continued

Previously reported Speedy Restated year ended reclassify- Total prior year ended 30 November cation as an Lease Lease year 30 November 2018 associate Incentives Accounting Dilapidations Other IFRS 9 IFRS 15 adjustments 2018 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Assets

Non-current assets

Property, plant and equipment 66,280 (68) - - 1,600 (1,905) - - (373) 65,907 Goodwill 189,730 (9,242) - (7,904) - - - - (17,146) 172,584 Intangible assets 122,482 (8,300) - - - 3,531 - - (4,769) 117,713 Investments in equity accounted 1,576 6,503 ------6,503 8,079 investees Deferred tax asset 5,850 (1,340) - - - (1,368) - - (2,708) 3,142

385,918 (12,447) - (7,904) 1,600 258 - - (18,493) 367,425

Current assets

Inventories 3,126 ------3,126 Trade and other receivables 231,166 (7,326) (5,640) - 1,226 (19,342) (4,117) (1,161) (36,360) 194,806 Cash and cash equivalents 5,234 (1,917) - - - 10,886 - - 8,969 14,203

239,526 (9,243) (5,640) - 1,226 (8,456) (4,117) (1,161) (27,391) 212,135

Total assets 625,444 (21,690) (5,640) (7,904) 2,826 (8,198) (4,117) (1,161) (45,884) 579,560

Liabilities Current liabilities Loans and borrowings (35,908) 1,976 - - - (10,885) - - (8,909) (44,817) Trade and other payables (169,558) 5,742 (3,178) (363) - 6,717 - (199) 8,719 (160,839) Current tax liability (7,038) 342 8,956 1,483 260 (2,298) 624 240 9,607 2,569 Provisions (3,454) - - - - (5,294) - - (5,294) (8,748)

(215,958) 8,060 5,778 1,120 260 (11,760) 624 41 4,123 (211,835)

Non-current liabilities

Loans and borrowings (128,989) ------(128,989) Trade and other payables (25,265) 9,864 (51,754) (1,457) - - - - (43,347) (68,612) Deferred tax liabilities (19,474) 9 - - - 8,459 - - 8,468 (11,006) Provisions - 1,072 - - (9,514) - - - (8,442) (8,442)

(173,728) 10,945 (51,754) (1,457) (9,514) 8,459 - - (43,321) (217,049)

Total liabilities (389,686) 19,005 (45,976) (337) (9,254) (3,301) 624 41 (39,198) (428,884)

Net assets 235,758 (2,685) (51,616) (8,241) (6,428) (11,499) (3,493) (1,120) (85,082) 150,676

Equity

Share capital 3,793 ------3,793 Share premium 146,002 ------146,002 Merger reserve 7,950 ------7,950 Translation reserve 79 ------79 Own shares (2,700) ------(2,700) Share option reserve 2,758 ------2,758 Retained earnings 77,876 (2,685) (51,616) (8,241) (6,428) (11,499) (3,493) (1,120) (85,082) (7,206)

Total equity 235,758 (2,685) (51,616) (8,241) (6,428) (11,499) (3,493) (1,120) (85,082) 150,676

Non-controlling interests ------

Total equity 235,758 (2,685) (51,616) (8,241) (6,428) (11,499) (3,493) (1,120) (85,082) 150,676

70 Total equity Non-controlling interests Total equity Retained earnings Share optionreserve Own shares Translation reserve Merger reserve Share premium Share capital Equity Net assets Total liabilities Provisions Deferred taxliabilities Trade andotherpayables Loans andborrowings Non-current liabilities Provisions Current taxliability Trade andotherpayables Loans andborrowings Current liabilities Liabilities Total assets Cash andcashequivalents Corporation Tax Trade andotherreceivables Inventories Current assets Deferred taxasset investees Investments inequityaccounted Intangible assets Goodwill 30. Prioryearrestatementscontinued Property, plantandequipment Non-current assets Assets 30 November 30 November year ended 1949 ,6 192 - (1,922) 2,966 (139,419) 1745 ,5 2,9)2 (7,863) 21 (27,395) 9,750 (147,465) 2684 276(937 1(,6)(,7)- 9)(978 (316,592) (29,708) (95) - (5,170) (7,863) 21 (29,317) 12,716 (286,884) (113,666) (128,218) Previously Previously 3,3 (10,922) 338,731 6,4 (4,652) 160,541 1,8 288 2,1)(,8)(,2)(,8)(,4)(5 4,0)162,585 (49,803) 162,585 (95) (49,803) (95) (1,140) (2,781) (1,140) (5,729) (2,781) (7,883) (5,729) (29,317) 162,585 (7,883) (49,803) (2,858) (29,317) (95) 212,388 (2,858) (1,140) 212,388 (2,781) (5,729) (7,883) 117,257 (29,317) (2,858) 212,388 (15,574) 499,272 148,979 172,353 (14,977) (18,822) reported reported 11,936 99,147 59,979 85,710 (2,700) (3,434) (7,767) (2,770) 3,579 2,396 5,976 1,276 1,079 7,950 £’000 (487) 2017 - - - cation as an cation asan reclassify- associate 089(735 21 (27,395) 10,879 Speedy Speedy (1,444) (8,912) 288 2,1)(,8)(,2)(,8)(,4)(95) (1,140) (2,781) (5,729) (7,883) (29,317) (2,858) (4,493) (9,242) 7,288 ,9 (1,922) 2,295 £’000 (159) 671 315 (56) ------Incentives Lease Lease £’000 (,0)1475,265 1,477 (7,904) - - (,0)214239(1,140) 2,389 2,134 (7,904) ------(7,904) - - - Accounting Lease Lease £’000 67(,7)(1,140) (2,875) 657 ------147(,3)- (1,030) 1,477 ------67(,7)(1,140) (2,875) 657 - (7,863) - - Dilapidations £’000 (,7)- 9)(,2)(143,640) (4,221) (95) - (5,170) ------(5,436) - - - - 6,294 ------266 - - - Other £’000 1 ------IFRS 9 £’000 - - - - (95) - IFRS 15 £’000 Annual Report and Accounts 2019 Accounts and Report Annual (204 326,647 (12,084) - (548 (172,953) (25,488) - (,1)152,531 (8,010) - (004 479,178 (20,094) ------adjustments Total prior 1,9)(35,318) (16,496) 1,4)155,207 (17,146) 4,0)35,907 (49,803) 546 (8,870) (5,436) 144 (16,421) (1,444) 90,235 (8,912) 781 141,128 (7,851) 758 (7,548) (7,548) ,8 8,564 7,288 ,9 12,270 6,294 19 11,777 (159) £’000 7 (7,096) 671 9 60,371 392 4 (127,674) 544 year year - (487) - 1,079 (2,700) - 7,950 - 3,579 - - (2,770) 2,396 - - 117,257 - (113,666) - - 30 November 30 November year ended Restated Restated £’000 2017 - - 71

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Company Statement of Financial Position as at 30 November 2019

Restated 30 November 30 November 2019 2018 Note £’000 £’000 Assets Non-current assets Investments 4 45,000 65,300 45,000 65,300

Current assets Amounts owed by Group undertakings 5 52,936 154,556 Other receivables 584 72 Cash 362 4 53,882 154,632

Current liabilities Amounts owed to Group undertakings 6 (52,936) (26,218) Other creditors 6 (3,952) (640) (56,888) (26,858) Non-current liabilities Amounts owed to Group undertakings -- -- Net assets 41,994 193,074

Equity Called up share capital 3,793 3,793 Share premium account 146,002 146,002 Merger reserve 7,950 7,950 Prior year treasury shares (2,700) (2,700) Share option reserve 4,218 2,758 Retained earnings (117,269) 35,271 Total shareholders’ funds 7 41,994 193,074

Loss for the year (134,483) (1,703)

This Statement of Financial Position should be read in conjunction with the notes to the Company Statement of Financial Position on pages 74 to 79 and the notes to the Consolidated Financial Statements on pages 33 to 71. The Company Financial Statements on pages 72 to 79 were approved by the Board of Directors on 4 July 2020 and were signed on its behalf by:

Christopher Casey Director

Company number 08922456

72 Balance at30November2019 Dividends paid Share basedpaymentcharges Loss fortheyear Balance at30November2018 Dividends paid Incentive plans Share basedpaymentcharges Issue ofcapital(netcosts) Loss fortheyear The accompanyingnotesformpartofthefinancialstatements Management rechargesnotpreviouslyrecognisedintheincomestate-ment Retained EarningsRestatements Balance at30November2017 Company Statement ofChanges inEquity for theyearended30November2019 ,9 4,0 ,5 ,1 270 1729 41,994 (117,269) (2,700) 4,218 193,074 35,271 7,950 (2,700) 146,002 2,758 3,793 7,950 146,002 3,793 ,7 1,5 ,5 ,7 270 58,546 (2,700) 1,079 7,950 117,257 3,579 capital Share £’000 1 875------28,745 214 (18,057) - - (134,483) - - (21,572) - - - 1,460 ------2 - - (1,703) - - - 523 1,156 ------premium Share Share £’000 reserve Merger Merger £’000 Share options Share options reserve £’000 30 November 30 November Reported Reported 460 ,2 (1,703) 2,927 (4,630) shares £’000 £’000 2018 Own Annual Report and Accounts 2019 Accounts and Report Annual Total prioryear (Accumulated (Accumulated adjustments adjustments Retained Retained earnings losses) / losses) / £’000 £’000 30 November (134,483) 185,711 (18,057) (21,572) 28,959 (1,703) Restated 1,460 1,156 £’000 £’000 523 2018 Total 73

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Company Financial Statements for the year ended 30 November 2019

1. Basis of Accounting Eddie Stobart Logistics plc is a public company limited by shares and incorporated in the United Kingdom. The results of the Company are included in the financial statements of Eddie Stobart Logistics Plc which are available from Stretton Green Distribution Park, Langford Way, Appleton, Warrington, Cheshire, England, WA4 4TQ. These financial statements present information about the Company as an individual undertaking and not about its Group. The separate financial statements of the Company are prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”) and the Companies Act 2006.

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken:

• Company cash flow statement and related notes • Disclosure in respect of transactions with wholly owned subsidiaries • Disclosures in respect of capital management • The effects of new but not effective IFRSs • Disclosure in respect of the compensation of key management personnel

As the Consolidated Financial Statements of the Group include equivalent disclosures, the Company has taken exemptions under FRS 101 available in respect of the following disclosures:

• Certain disclosures required by IFRS 13 Fair value measurement • Disclosures required by IFRS 7 Financial instrument disclosures • Share based payments – IFRS2 is being applied to equity instruments

The financial statements are presented in Sterling rounded to the nearest thousand.

Under Section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.

Basis of preparation The Company accounting policies set out below have been applied consistently to all years in these Financial Statements, other than where new policies have been adopted. These financial statements have been prepared on a going concern basis, in accordance with The Companies Act 2006 as applicable to companies using FRS 101 and under the historic cost convention.

The Company is reliant on loan funding that Marcelos Limited has agreed to provide to enable the Company to settle its expenses and liabilities as they fall due. The Directors have seen evidence that Marcelos Limited has sufficient funding to meet this obligation. The Directors believe that the funding available is sufficient to enable the Company to meet its obligations as they fall due for at least 12 months from the date of the approval of these financial statements.

Having considered all the above, the Directors continue to adopt the going concern basis in preparing the Financial Statements.

2. Significant Accounting Policies The accounting policies adopted by the Company are consistent with those used in the Group’s Consolidated Financial Statements as set out in note 1, except for the following items which are only relevant for the Company as a standalone entity.

On the 9 December the Company disposed of a controlling holding in the Eddie Stobart business to DBAY as set out in note 29 of the consolidated accounts.

As part of this transaction the net of all intercompany balances owed to and from the Company and the Eddie Stobart business were capitalised as investment in the Group. An impairment test has been carried out with the value in use considered to be the average closing market capitalisation of the Company over the five trading days following its re-admission to AIM, £45m. This resulted in £99.3m impairment of intercompany receivables and £20.3m impairment of investment at 30 November 2019.

Judgements and key sources of estimation The preparation of financial statements in accordance with generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

key estimates with a significant risk of material adjustment in the next year, are discussed below:

• IAS 36 ‘Impairment of assets’. In testing for impairment of investments in, and amounts due from, subsidiary undertakings, the Directors have made certain assumptions concerning the future development of its subsidiary businesses that are consistent with their annual budgets and forecasts into perpetuity. Should these assumptions regarding the discount rate or growth in the profitability be unfounded then it is possible that investments in, and amounts due from, subsidiary undertakings included in the balance sheet could be impaired.

74 £20.3m impairmentofinvestmentat30November2019(seenote2). the Companyoverfivetradingdaysfollowingitsre-admissiontoAIM,£45m.Thisresultedin£99.3mimpairmentofintercompanyreceivables and investment intheGroup.Animpairmenttesthasbeencarriedoutwithvalueuseconsideredtobeaverageclosingmarketcapitalisation of As partofthistransactionthenetallintercompanybalancesowedtoandfromCompanyEddieStobartbusinesswerecapitalised as accounts. On the9DecemberCompanydisposedofacontrollingholdinginEddieStobartbusinesstoDBAY assetoutinnote30oftheconsolidated At 30November Cost andnetbookvalue The costandprovisionsforimpairmentoftheCompany’sinvestmentsareshownbelow: 4. Investments between servicesasDirectorsoftheCompanyandGroupsubsidiaries. The Companyhastwodirectemployees(2018:2).Directorsdonotbelieveitispracticabletoapportiontheremunerationof 3. EmployeesandDirectors In theStatementofFinancialPosition, cashincludesandequivalentsexcludingbankoverdrafts. Cash andcashequivalents Investments insubsidiariesarestatedatcostandreviewedforimpairmentifthereindicationsthatthecarryingvaluemaynotberecoverable. Investments andamountsowedbyGroupundertakings which theestimateisrevisedandinanyoffutureperiodsaffected. The estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingrecognisedintheperiod • 2. SignificantAccountingPolicies continued

service andnon-marketperformanceconditionsatthevestingdate. are expectedtobemet,suchthattheamountultimatelyrecognisedasanexpenseisbasedonnumberofawardsdomeetrelated valuation isbasedonestimatesofthenumberoptionsthatwilleventuallyvest,relatedserviceandnon-marketvestingconditions expense overtheperiodinwhichemployeesbecomeunconditionallyentitledtooptions,withacorrespondingincreaseequity services renderedbythem.Thefairvalueismeasuredusinganoptionvaluationmodelatthedateofgrantandrecognisedasemployee IFRS 2‘Share-basedpayments’.TheCompanyhasissuedequitysettledshare-basedpaymentoptionstocertainemployeesinexchangefor

Annual Report and Accounts 2019 Accounts and Report Annual 30 November 45,000 £’000 2019 30 November . This 65,300 £’000 2018 75

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Company Financial Statements continued for the year ended 30 November 2019

4. Investments continued In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country of incorporation and the effective percentage of equity owned, as at 30 November 2019 is disclosed below:

Proportion of ordinary share capital held Company name Business activity Directly Indirectly Country of incorporation Subsidiary undertakings: Registered office Stretton Green Distribution Park, Langford Way, Appleton, Warrington, WA4 4TQ Greenwhitestar Acquisitions Limited Holding company 100% United Kingdom Stobart Transport & Distribution Limited Holding company 100% United Kingdom Eddie Stobart Group Limited Holding company 100% United Kingdom AHL Anglia Limited Holding company 100% United Kingdom AIL Anglia Limited Holding company 100% United Kingdom iForce Group Limited Holding company 100% United Kingdom TLP Holdings Limited Holding company 100% United Kingdom Eddie Stobart Limited Contract logistics 100% United Kingdom Stobart Truckstops Limited Logistics support 100% United Kingdom O’Connor Container Transport Limited Contract logistics 100% United Kingdom O’Connor Container Storage Limited Contract logistics 100% United Kingdom Westlink Storage & Shipping Company Limited Warehouse logistics 100% United Kingdom iForce Auctions Limited Contract logistics 100% United Kingdom iForce Limited Contract logistics 100% United Kingdom iForce Trading Limited Contract logistics 100% United Kingdom Stobart Rail Freight Limited Dormant 100% United Kingdom Autoteq Limited Dormant 100% United Kingdom Acumen Distribution Service Holdings Limited Dormant 100% United Kingdom Autologic Services Limited Dormant 100% United Kingdom Buyforce Limited Dormant 100% United Kingdom iForce Holdings Limited Dormant 100% United Kingdom

Associate undertakings: Registered office Puro House, Unit 2 The Pavilions, Cranford Drive, Knutsford Business Park, Knutsford, Cheshire, WA16 8ZR

Puro Ventures Limited * Contract logistics 47.5% * United Kingdom

Subsidiary undertakings: Registered office Unit 1 Ore Lane, Midlands Logistics Park, Corby, Northamptonshire, England, NN18 8JX

The Logistic People Limited Recruitment services 100% United Kingdom

Subsidiary undertakings: Registered office PO BOX 286, Floor 2 Trafalgar Court, Les Banques, St Perter Port, Guernsey, GY1 4LY

ESLL Group Limited (formerly Eddie Stobart Logistics Limited) Holding company 100% Guernsey

Subsidiary undertakings: Registered office Bond Drive Extension, Dublin Port, Dublin 3

Eddie Stobart (Ireland) Limited Contract logistics 100% Ireland Eddie Stobart (Ireland) Drivers Services Limited Contract logistics 100% Ireland

Subsidiary undertakings: Registered office Prologics Park, Midpoint Way, Minworth, West Midlands, B76 9EH

The Pallet Network Group Limited Contract logistics 100% United Kingdom The Pallet Network Limited Contract logistics 100% United Kingdom

Subsidiary undertakings: Registered office Unit 3, The Drive, Gatwick Road, Crawley, West Sussex, RH10 9AN

Eezehaul Limited Contract logistics 100% United Kingdom

76 Subsidiary undertakings:Registeredoffice Transport Service&LogisticsGMBH C/O CulinaGroupLimited,ShrewsburyRoad,MarketDrayton,TF93SQ IPS atEddieStobartLimited, Joint Ventures: Registeredoffice Eddie StobartLogisticRomaniaSRL Bucuresti Street(DJ601)no.51,077055Ciorogarla–Ilfov, Romania Walon Poland SPzo.o. ul. KrakowSuburb47/51,00-071Warsaw, Poland Subsidiary undertakings:Registeredoffice Stobart AutomotiveCZs.r.o. U Stavoservisu692/1b,10800Praha10,CzechRepublic Subsidiary undertakings:Registeredoffice Eddie StobartLogisticsBulgariaOEED Velika &GeorgiChencheviStreet3,5400Sevlievo, Bulgaria Subsidiary undertakings:Registeredoffice Automotive PlantReleasingServicesNV Stobart AutomotiveEuropeNV Stobart AutomotiveBelgiumNV Eddie StobartLogisticsEuropeNV Eikelaarstraat 28,3600Genk,Belgium Subsidiary undertakings:Registeredoffice Stobart AutomotiveNLBV (formallyWalon BV) Eddie StobartEuropeHoldingBV (formallyAutologicBeneluxB.V.) iHazeldonk 6049,4836LABreda,TheNetherlands Subsidiary undertakings:Registeredoffice Company name 4. InvestmentsinSubsidiaryUndertakingscontinued ** TSK Transport Service& LogisticsGmbh** Garmisch-Partenkirchen,Hauptstraße 96,D-82467 Germany * Paseio delaCalderona,28850Ciempozuelos,Spain Transport Service&ReleasingIberiaS.L. Garmisch-Partenkirchen,Hauptstraße 96,D-82467 Germany   the liquidationofaBelgianintermediateholdingcompany The Company’s50percentinterestinTSKcontinuestobeheldindirectly andhasbeenregisteredasbeingheldbyAHLAngliaLimitedfollowing  The Grouphasa47.5%shareholdingbutitholds50%ofthevoting rights  . Business activity Contract logistics Contract logistics Contract logistics Dormant Contract logistics Contract logistics Dormant Contract logistics Contract logistics Contract logistics Contract logistics Holding company Contract logistics Contract logistics Proportion ofordinaryshare ietyIndirectly Directly capital held Annual Report and Accounts 2019 Accounts and Report Annual 100% 100% CzechRepublic 100% 100% 100% 100% 100% 100% TheNetherlands TheNetherlands 100% 100% 0 Germany 50% UnitedKingdom 50% 0 Germany 50% 33% Country ofincorporation Romania Bulgaria Belgium Belgium Belgium Belgium Poland Spain 77

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Notes to the Company Financial Statements continued for the year ended 30 November 2019

5. Receivables Restated 30 November 30 November 2019 2018 £’000 £’000 Amounts falling due within one year: Amounts owed by Group undertakings 52,936 154,556

The Company has amounts due from Group undertakings which are repayable on demand. Repayment is not anticipated within the year ending 30 November 2019.

On the 9 December the Company disposed of a controlling holding in the Eddie Stobart business to DBAY as set out in note 29 of the consolidated accounts.

Prior year comparatives have been restated to reflect a revised intercompany position.

As part of this transaction the net of all intercompany balances owed to and from the Company and the Eddie Stobart business were capitalised as investment in the Group. An impairment test has been carried out with the value in use considered to be the average closing market capitalisation of the Company over the five trading days following its re-admission to AIM, £45m. This resulted in £99.3m impairment of intercompany receivables and £20.3m impairment of investment at 30 November 2019 (see note 2).

6. Trade and Other Payables (Current) 30 November 30 November 2019 2018 £’000 £’000 Current Liabilities Amounts owed to Group undertakings (52,936) (26,218) Other creditors (3,952) (640) (56,888) (26,858)

The Company has amounts due to Group undertakings which are repayable on demand.

7. Reconciliation of Movement in Shareholders’ funds Restated 30 November 30 November 2019 2018 £’000 £’000 Opening shareholders’ funds 193,074 185,711 New share issue - 214 Share premium on issue (net of share issue costs) - 28,745 Share incentive provision - 523 Share based payments 1,460 1,156 Dividends paid (18,057) (21,572) Profit and loss (134,483) (1,703) Total shareholders’ funds 41,994 193,074

As permitted by Section 408(4) of the Companies Act 2006, the Parent Company’s Income Statement has not been included in these Financial Statements. The Parent Company’s loss after tax for the financial year was £134.5m (2018: £1.7m loss).

78 There arenosubsequenteventsfortheCompanyotherthanthosedisclosedinnote29ofconsolidatedaccounts. 10. SubsequentEvents liability at30November2019was£124.0m(2018:£124.0m). There isanunlimitedbankcrossguaranteearrangementbetweentheCompanyandsomeofsubsidiaryundertakings.Themaximumpotential 9. ContingentLiabilities At 30November2019,theCompanyhadnocommitments(2018:£nil). 8. CapitalCommitments management andemployeeshare-basedincentiveschemepayments.Further detailsaredisclosedinnote24. Consist ofprovisionsmadeduringthefinancialyearrelatingtoLong-Term IncentiveandManagementPlansforfutureliabilitiesrelatingto Share optionsreserves trust andthereforewillcontinuetobepresentedwithinOwnsharesintheGroupfinancialstatements. employee benefittrust.Ifthesesharesareforfeitedthroughoutthevestingperiodforleaversoranotherreasontheywillcontinuetobeowned bythe This reservearosewhentheGroupissuedequitysharecapitalunderitsShareIncentivePlan(SIP)whichisheldintrustbytrusteeof theGroup’s Own sharesreserve Consolidated andCompany’sBalanceSheetinaccordancewithIAS32. benefit trust.TheordinarysharesheldbythetrusteeofGroup’semployeetrustpursuanttoSIParetreatedasOwnin Included inthetotalnumberofordinarysharesoutstandingaboveare1,690,000(2018:1,690,000)heldbyGroup’semployee Own shares provide partofthefundingforacquisitionTPNGroup. On 28June2018theCompanyplaced21.43mOrdinary1pshareswithanattachedmergerreserveof139ppershare(140pintotal),to shareholders ofiForce Groupfortheirinterestsinthebusiness. The Companyalsoissued5mordinary1pshares,withanattachedsharepremiumof159pper(totalvalue(160pshare)tothe 160p pershare)onAIM. On 25April2017theCompanyplaced76.25mOrdinary1pshareswithanattachedmergerreserveof159ppershare(thetotallistingpricebeing the currentshareholdersatsametime. per share.AlsopriortotheIPO, sharepremiumwascancelledinordertoconvert intodistributablereserves.Abonusissueofshareswasgrantedto Prior totheIPO, theCompanyperformedasharesplit,withconsequencethatordinarycapitalreducedfrom£1parvalueto1p Ordinary sharecapital,premiumandmergerreserve 7. ReconciliationofMovementinShareholders’fundscontinued Annual Report and Accounts 2019 Accounts and Report Annual 79

Governance Strategic report Financial statements Eddie Stobart Logistics plc

Glossary

Term Definition Accounts The financial statements of the Group and/or the Company, as appropriate Admission The admission of the issued ordinary shares to trading on AIM that became effective on 25 April 2017 ADR The European Agreement concerning the International Carriage of Dangerous Goods by Road AGM Annual General Meeting of the Company AIM Alternative Investment Market of the London Stock Exchange APMs Alternative Performance Measures Board Board of Directors of the Company Brexit A reference to the UK’s referendum decision to leave the European Union CAGR Compound Annual Growth Rate CGU Cash Generating Unit Company Eddie Stobart Logistics plc a public limited company incorporated in England and Wales with registered 08922456 DBAY DBAY Advisors Limited and/or any fund(s) or entity(ies) managed or controlled by DBAY Advisors Limited as appropriate in the relevant context DBAY Transaction On 9 December 2019 DouglasBay Capital III Fund LP, a fund managed by DBAY Advisors Limited completed the acquisition of an indirect 51% equity stake in Greenwhitestar Acquisitions Limited, the holding company of the Eddie Stobart trading entities (including Eddie Stobart Limited, iForce Group Limited and The Pallet Network Limited) Directors The Directors of the Company as at the date of this document, as identified on page 10 EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation Eddie Stobart business The group of companies of which Greenwhitestar Acquisitions Limited is the operational holding company which includes the following Eddie Stobart trading entities; Eddie Stobart Limited, iForce Limited, The Pallet Network Limited and The Logistic People Limited. EPS Earnings Per Share Executive Directors Alex Laffey, Damien Harte, Anoop Kang and Sebastian Desreumaux FY18 Financial Year ended 30 November 2018 FY19 Financial Year ended 30 November 2019 Group The Company and its subsidiaries as at 30 November 2019 GWSA Greenwhitestar Acquisitions Limited, the operational holding company of the Eddie Stobart businesses HGV Heavy Goods Vehicle HSQA Health Safety, Quality and Assurance HY18 Six month period ended 31 May 2018 HY19 Six month period ended 31 May 2019 IAS International Accounting Standards iForce/iForce Group iForce Group Limited, a subsidiary of the Company as at 30 November 2019 IFRS International Financial Reporting Standards IPO The Initial Public Offering of ordinary shares resulting in the Admission LTIP The Long Term Incentive Plan described on page 17 MHE Material Handling Equipment MIB Manufacturing, Industrial and Bulk MIP Management Incentive Plan described on page 17 Ordinary Shares/Shares Ordinary shares of £0.01 each in the capital of the Company PIK loan facility Loan of £55m used to effect the DBAY transaction, which carries interest at 18% compounding quarterly, maturing in November 2025 PWC The Company and Group’s auditor RFC Regional Fulfilment Centre QCA Quoted Companies Alliance QCA Corporate Governance Code QCA Corporate Governance Code for Small and Mid-Size Quoted Companies published by the QCA Sectors The Group divides its business up into sectors, comprising of Retail, Consumer, E-Commerce, Manufacturing Industrial and Bulk (MIB) and Other SIP Share Incentive Plan described on page 17 Speedy Freight Puro Ventures limited, an investee company of the Group as at 30 November 2019 that trades as Speedy Freight The Logistics People The trading name of TLP Trading group The Eddie Stobart trading companies of which GWSA is the operational holding company TLP The Logistic People TPN The Pallet Network UK GAAP UK Generally Accepted Accounting Principles

80 EC1A 4HD London 200 AldergateStreet Consulting FTI Relations Public EC2R 7AS London Tokenhouse Yard Cenko Securitiesplc Nomad BR3 4TU Kent Beckenham 34 BeckenhamRoad The Registry Link AssetServices Registrars forEddieStobartLogisticsplc Advisors Annual Report and Accounts 2019 Accounts and Report Annual 81

Governance Strategic report Financial statements Eddie Stobart Logistics plc Annual Report and Accounts 2018 Eddie Stobart plc Eddie Logistics Park, GreenStretton Distribution Appleton, Langford Way, Cheshire, Warrington, WA4 4TQ